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Treatise on Trust Law

Treatise on Trust Law

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of the



New York

Author of " Trust Estates as Business Bar. Companies," " Corporations in Missouri."

T. H.




Copyright. 1917,

John H. Sears

5<l 174




The purposes
ductory Chapter.

of this

book are stated

in the Intro-


the labor expended upon

has been justified can only be ascertained by

practical uses,

now untried. To Judge Needham C.

Collier of St. Louis


author subscribes his grateful acknowledgment for
assistance in


John H.
37 Wall Street,


New York






Table of Contents



Scope of


§ 2. § 3.

Desirability of

Work. Uniform Laws.

Outline of Trust

Company Functions and Plan



in this

Definition of "Trust"
§ 4. § 5. § 6. § 7. § 8. § 9.


— Protection



Fiduciary Companies Defined. "Trustee Company" in England. Statutory Trust Company in America. Enlarged Sense Given to the Word "Trust." Protection of the Title "Trust Company." Protection of Particular Trust Company Names.

§ 10.


Special and Exclusive Privileges of Trust Companies.

Constitutional Provisions in their General Aspect and
Police Power.

§ 12.

Discriminations as between

Corporations and Indi-

Right of State to deny certain powers to other than Corporate Fiduciaries.

Qualification of Trust



Assume Fiduciary

§ 13.


§ 14.

Necessity that Trust

Company Should Receive Com-



§ 15. § 16.
§ 17.

Oath by Statutory Fiduciary Unnecessary. Qualification by Deposit of Securities. Consolidation, Merger and Successorship of Trust Companies Status with reference to Fiduciary Business of constituent Companies.

§ 18.
§ 19.

Ultra Vires.

Diversity and Limitations of Powers.



Trust Companies

in General.

Vires as Affected by








Extension of Functions of Statutory Trust Companies, Banks, Agents, Guardians and Committees, Receivers and Assignees, Sureties, Guarantors, Underwriters.
§ 20.

§ 21. § 22. § 23. § 24. § 25. § 26. § 27.
§ 28.

Corporation Limited to Charter Powers. Principles of Construction of Trust Company Charters.

The Trust Company

Organization under General and Special Laws. as Having Varied Powers. Trust Companies as Banks. Trust Companies as Agents. Trust Companies as Guardians and Committees. Trust Companies as Receivers and Assignees.

§ 29. § 30.

Trust Companies as Sureties. Power of Trust Companies to Act as Guarantors. Trust Companies as Underwriters.

§ 31.


Trust Companies as Trustees.
Trust Companies Generally Like Individual Trustees. Specific Provisions as to Integrity of Trust Funds. Participating Mortgages. Integrity of Trust Funds

§ 32. § 33. § 34.

Deposit of Trust Funds in Company's Own Banking Department or with Company's own deposits in
other Banks

— Interest Rates.

§ 35.






§ 36.

Liability of a Trust


Trust Funds.

and Administrators. § 40. Liability of Joint Trustees. Trust Company— Indemnity In General. IX. § 55. of Form of Mortgage Deeds § 56. CHAPTER Trust Companies § 43. In General. CHAPTER VIII. §44. In General. Details in in Mortgage-Deeds of Trust. § 46. § 39. Instrument to Secure Bond Issues. for Trust Companies as Co-Fiduciaries and as Agents Individual Fiduciaries. Liability of Joint Executors Liability §41. VII The Following. X. §38. § 47. § 50. Issues. Nature and Extent of Implied Duties. Examples and Construction Co-Trustees." The Legality of "Community Trusts.— TAREE OF CONTENTS." CHAPTER Stipulations for Protection of Clauses. as Agent for Individual Fiduciaries. . Origin and Plan of the " Foundation" or "Community Trust. Express and Emplied Covenants Trust. Right to follow Trust Funds turned over by a Statutory Trust Company. § 45. § 52. Bond Preliminary. §37. § 42. of Indemnity Clauses— Indemnity Clauses § 48. Form §53.of Trust Property and its Proceeds. Theory and History of Mortgage-Deeds for Bond of Issues. XI. as Trustees for Charities. Active Nature of Trusteeship for Bond Issues. CHAPTER Trustees for § 49. Examples and Construction of Employment of Agents. Legality of Such Instruments. §54. § 51.

Criticism of the Form and Security of Car Trusts. Definition and Effect of "Countersigning. Singleness of — Removal of Trustee. § 76. Express Possibility of Compelling Corporations to Authenti- cate their Securities through Independent Sources. § 72. Implied Power Implied Power of Bank to Act as Transfer Agent. Transfer Agents and Registrars.— VIII TABLE OF CONTENTS. Trustees under Conflicting Mortgages. Necessities. § 64. § 60. § 74. CHAPTER § 65. Suggestion that Liens for Equipment be given Priority by Legislative Enactment. Protecting Legislation. Intervention by Individual Bondholders. 77. Car or Equipment Trusts. § 75. § 70. In General. § 73. XIII. Transfer Agent Defined. Safety of Investments in Car Trusts. Status of Equipment under After-Acquired Property Clauses. CHAPTER § 71. Instructions of Mortgagor and Bondholders as Protection to Trustee. for Misrepresentations as to Quality and Extent of the Security. — Parties. § 66. § 59. § 68. Continued. Majority Rule. Trustees under Conflicting Mortgages. § 62. Liability Damages for Breach of Trust § 58. XII. Application by Trustee for Advice and Instruction of — the Court. in Banks to Create Transfer Agencies Not Sufficient for Business Power of Trust Companies. § 67. Derivation and Need of Equipment Trusts. Clauses for Reports to Trustees. § 69. § 63. § 61. Duty Owed by Trustee in Bond Issues. Liability of Trustee for § 57." . if The terms "Registrar" and "Registered" Defined.

by Sub-Agency of Employees. § 82. § 98. CHAPTER Trust Companies as Depositaries § 90. Property Held as Collateral by a Bank. XIV. Liability of § 79. Liability as Affected § 86. § 87. § 99. Where Cause of Action Arises with Transfers by Transfer Agents. Possession of Safe Deposit §97. — Safe Deposit Companies. Liability of Officer for Loss of Funds in Depositary. § 91. §94. IX Right of Corporation to place Restrictions upon Transfer and Issue of its Stock Incident to Services of a Countersigning Agent. §92. § 96. Importance of Terms Used by Trust Company in Describing its Capacity Contracts in Limitation — of Liability. . Liability as Liability as Companies as Transfer Agents. Liability of Safe Deposit Companies. §93. Access under Power of Attorney. on Instruments Does Not Constitute Signature until Blank for Signature is Name of Officer § 88. Depositaries as Gratuitous Bailees. Preliminary. § 85. § 78. Transfer Agent Concluded. Joint Renting and Access. Transfer Agent Continued. Companies for Acts of their Transfer Agents. § 95. Precautionary Requirements and Rules as Protection against Improper Transfers.TABLE OF CONTENTS. § 84. Company so far as Attach- ment is concerned. Liability of Trust §81. Registrars. etc. and Penalties. Printing of Fiduciary's Filled. § 83. A Trust Company as Depositary. § 80. Liability of Officer Depositing Private Funds. — — Liability as Registrar of Stock. Inspection of Books of Transfer Agent— Mandamus reference to § 89.

§ 110. of a Strict Escrow Agreement. Company as Abstractor is Liable to Emwhen Liable to Third Persons for whose is Benefit Abstract obtained. CHAPTER § 100. When Statutes of Limitation begin to run on Title Policy. Voidance of Policy by False Answer in Application. . § 113. to Public Records. Relation assumed by Trust Company in Examining Titles and Acting as Conveyancer. — — § 116. XV. § 104. Searching. the Negligence and § 108. § 105. § 103. Company's Right of Access Remedy of Mandamus. Abstractors and Title Insurers. In General. Record Title Only Insured. Insurance Company placed on Notice to use Great Care. Title Insurance Covers Interest Insured irrespective of the Real Interest of the Policy Holder. When ployer and § 109.— X TABLE OF CONTENTS. Right of Access to Public Records. § 107. § 118. §112. Provision for Subrogation of Company. The Nature Summary. Rights against Grantor not affected by fact that Grantee has Title Insured. § 115. Escrows. Liability and Measure of Damages upon Title Policies. § 101. §117. Exceptions and Conditions. Construction of Policy. "Patent or Short Form Indices" Not Required by Law to be Kept. Preliminary. CHAPTER XVI. § 106. Effect on Right to Recover on Policy. Duty as Conveyancer to Advise Client of Encroachfor ments. Policy of Title Insurance construed to be one of Indemnity though Guarantee added. § 102. § 111. § 114. Abstract Business and Title Insurance Defined and Contrasted. Trust Companies as Conveyancers.

Preliminary. § 121.— TABLE OF CONTENTS. Admission in Some States. Right to sue without qualifying in Foreign State. Books and Records as privileged Duces Tecum. Distinction as to Corporation furnishing Services to Attorneys at Law. for Fees. § 130. § 128. CHAPTER § 123. Mere Acceptance of Mortgage Trusteeship without Action under Trust Deed not doing business in Foreign State Taking possession of property and operating it might require qualification. Statutes regarding Practice of Law by Corporations. A § 125. Offense. § 132. CHAPTER § 129. Attorney Appearing for Corporation Practicing Law cannot take Advantage of its Illegal Conduct. Laws . Branch cial Offices. § 119. Complying with Local Laws. Corporations Practicing Law. XVII. a § 126. § 124. Individual and Fiduciary Capacity. Exclusion of Foreign Trust Companies — Need of Spe- § 133. Prima-facie Presumption that Trust Company has the Power § 131. XVIII. External or Foreign Business. Deposit of Securities. Liability to Title Company — Participation of Attorney. Agreements by Attorneys with Unqualified Persons Common Law § 127. In General. Law § 120. Private Abstract against Disclosure under Subpoena § 122. Regulation by Register where Title Company is making complete copies of Records Number of Employees Having Access to Records at One Time — Limited. § 134. Corporation not a Person so far as Licensed Professions are concerned. to execute a trust in a Foreign State. States Courts Required by Indices of United to be Kept. § 135. for . XI Right of Access to Public Records.

Distinction in Rule of Notice and Guarantee of Fidelity. Authority of Officers. § 150. Same Applied to a Trust Company. § 139. § 143. § 151. CHAPTER XX. § 145. Continuance of Authority of Agent for Service of Process after Withdrawal from State. Notice to Officer in his Department. Liability for Neglect. Service of Process upon Director of Foreign Trust Company. Knowledge § 148. § 141. Employees and Stockholders to act as Notaries and Witnesses. to be Imputable to Trust Company must presume Fraud. § 147. Fund held by Domestic Trust Company under a Will proved in a Foreign State. Protection of Customers' Affairs from Disclosure by Trust Company Officers and Agents. . § 13S. § 154. CHAPTER Trust Company § 142. XIX. Foreign Trust Company Qualifying as Executor by giving Bond and appointing Agent for Service of Process with respect to a Particular Estate. Officers. Visitation — Supervision — Reports. § 144. Imputable Knowledge of Officer. Impersonation of Trust Company by its Officers. § 153. Identifying of Trust Equity. § 146. § 140. Distinction as to Executive Committee. Jurisdiction over § 136. Restrictive Statutes not Retroactive. Acts of Officers creating Trust Fund though no money passes to Trust Company. Effect of Non-compliance by Trustee upon Validity of the Trust. Fund Proceeds necessary in § 152. Competency of Trust Company Officers. § 149. Visitation and Supervision — Reports— Insolvency or its Preferences.— XII TABLE OF CONTENTS. Duties of Directors. § 137.

427 434 447 460 1914 474 Suggestions to Corporations Desiring the Services of a Trust Company as Transfer Agent to Register Transfers of Stock Suggestions about Stock Transfers Report of Conference of Transfer Agents and Counsel. . Statutory I XIII 'references Against insolvent Trust Com- pany. Instructions to Transfer Department as to Transfer Requirements Laws. Pages Trust Company Statutes and Sources from which copies 262 may be obtained "The Model Trust Company Law" 269 New York Text of Trust Company Law Trust 279 328 a Instructions and Forms for Organizing a Company under the Laws of New York Precedents Showing New York Trust Trust Company Charters Trust Company By-Laws Amendments Company to Charter of 338 353 382 Community Trusts The Cleveland Foundation Los Angeles Community Foundation Boston Permanent Charity Fund Mortgage-Trustee Clauses Annotated Report of the Committee on Railroad Bonds and Equipment Trusts to the Board of Governors and Members of the Investment Bankers Association of America. 496 497 500 519 States 527 . APPENDIX. . §155.: : TABLE OF CONTEXTS. Rulings and Opinions Relating to the Admission of Foreign Trust Companies to do business in various .


of this nature. know of no book. assisted as far as may be by such adjudicated cases as I have discovered. yet appearing. though there have been several very excellent books giving the history of legislation in regard to these corpora- . but also upon that of public relation- policy in the restraining of artificial beings created by law to prescribed functions in and about such ship. That phase its of busi- equitable principles has received greatly the attention of in regard American law makers. It also enacts particular procedure as to violated right for and against such beings. distinction as to application of principle so While far as individuals and corporations are concerned constantly will be stressed. necessarily the discussion often will involve primary rights as between man and man and such evolution of Equity jurisprudence as modern condiI tions require.CHAPTER 1 INTRODUCTORY § 1. which has grown out of to trusts. ness life Scope of This Work. all of which will be considered hereinafter from the standpoint of general principles. Legislation along these lines proceeds not only upon the theory of denning the contract relationship of parties.

formerly would not take kindly to the thrusting forward of oneself. therefore. Duties of this nature. should appreciate of these pulsations of sympathy and truly interpret the intentions of trustors. no red blood it in its veins. chosen because of fitness and integrity in and about the and pointing to the great in growth performance of the trust duties imposed. and whosoever chooses to avail himself of their offer of services is at liberty to do so. matters. but all I am here concerned in is knowledge of the fact that the law recognizes corporate trustees. They proffer showing of their equipment for successful performance and financial responsibility behind their offers to perform. When corporations enter on the scene. because of the way they hold themselves out. Of course. its agents. the equipment of which I speak may call for more than is found in other kinds of corporations. These call for officials of different characterpurely business basis. The confidential nature of his duties may prevent to some extent the procuring of the relation of trustee on a There is advice and solicitude in particular cases to be regarded and sentiment to be considered. through whom is only acts. the aspect of things become wholly changed.2 tions TRTJST COMPANY LAW [§1 America of corporate effort in a field where confidence was formerly These individuals were reposed only in individuals. The rule of stringency in measuring their liability may be deemed to be invoked by them. It has been debated pro and con whether corporations were preferable or not to individuals in such relations. The law not as dry as dust in all . istics than the calculating corporation ordinarily preIf the latter has sents. but would wait upon selection by the creator of a trust.

how it is declaratory of these principles or in- troduces other law opposed thereto. a minor's guardian might with advantage be something more than a mere legal abstraction and so. lations may be stated that of the fiduciary re- which corporations assume as expressly authorized by statute. on occasion." The old law on these subjects is that of intrinsic right and its application in a branch of equity. to see how far this legislation corresponds or departs therefrom. which calls for the possession of other attributes than rules business acumen or experience. all Finally. owners in the selection of defines. no one may gainsay. as claimed.§1] SCOPE OF THIS WORK 3 It is conceivable. "the old law. Besides all of this. The mischief may about the life consist. In this work I hope to be of assistance in the interpretation of this legislation and in denning what it may embrace of things not specifically provided for. that a corporate trus- tees' board may sometimes be vested with discretion. therefore. to make provision for corporate trustees compels It no one to resort to them. their adaptability and training for the duties imposed. That often there may exist this uncertainty as to individual fiduciaries. For example. in the uncertainty and continuing responsibility of individual trustees. or which the law otherwise permits them to assume. The remedy is the removing of this uncertainty. the mischief and the remedy. or tends to define. but amplifies the rights oi their agents and particularly the duties and obligations of the latter. Hard and fast should not apply to the management of every trust. I will endeavor to expose and declare according to the principles of law and equity. My inquiry invokes the maxim. . it might be it in other instances. that is to say.

why should there not be uniformity as to their organization. This legislation being designed to meet a general it should not be gored by the reefs on the shores of different states. When adjective law varies in yet it its provisions. . [§2 Desirability of all Uniform Laws. might make a great difference further.4 TRUST COMPANY LAW § 2. essentially. Consideris ing that of the legislation above referred to to vest in corporations the right to hold themselves out to the public in and about matters coming under the police powers of the State. There are no intrinsic rights involved. this is but diversity in detail. as the adjective quality of this legislation concerns general principles of universal application. as there is and proin voke contrariety in ruling of substantial importance. rather than statutory remedies. restrictions and safety? The rule of construction. is of the adjective rather than of the substantive law of a commonwealth. Still practically the same need different communities for these corporate agencies. it ought to be as broad in application as are those principles. it becomes apparent that there ought to be uniformity therein throughout the states. powers. and that the interrelations of citizens of different states are more intimate than under former conditions. especially such statutes. but should sail rather than a local demand. Furthermore. and statutes to the important as regards the detail of is wholly unnecessary to subject differ- danger of variant construction by ent courts. yet it affects in great measure the general commercial rights of citizens of all states. and in results. that what is expressed excludes what is it is unex- pressed. Such legislation. the It comes under same quality of public policy in one state as in another.

Depositary of Escrows. good and worthy of permanence in trust company laws has been developing from the experience is What of various states. will increasingly attract that which easily understood and known laws create. (2) Fiduciary services to both individuals and corporations (a) (b) (c) Trustee under agreement or declaration of trust. restrictions and safety. It is advocated that this experience be eventually crystallized into one code. whose application it like a noble ship seeks to assist. Renting of safe deposit vaults and boxes. Outline of Trust Plan of Treatment in scope. (g) (h) Receiver and Assignee. (d) (e) (f) Depositary of other papers and property. is Company Functions and This Book. § 3. . Agent or Attorney in fact. and that to this end new its legislation in each state should strive to conform trust company laws as nearly as possible to a standard in matters of organization. in widest as follows: (1) Banking: Commercial. The practical diviits sion of a typical trust company's activities. (a) (b) Savings. Examination and Insurance of Titles to real estate. By this means trust companies everywhere confident reliance.: §3] PLAN OF TREATMENT 5 on the broad bosom of the deep sea of the principles of right and justice. powers. Surety.

in their various capacities. Trustee for Voting Trusts. Registrar. Fiscal agent.. in Discussion of these cases properly belongs wills. Executor or Administrator. are those which differentiate their legal status from that of individuals conducting like businesses. A process of elimination by which the subject could be reduced to the legal topics that may properly be called "trust company law" and as such are exclusive of problems not affected by this form of organization. (g) Guarantor and underwriter of useful the above division it securities. corporations. in such a way as not to vary the ordinary rules of law. insurance. panies. Guardian. etc. and is therefore excluded from this work. The is legal questions affecting trust com- which it the purpose of this book to discuss. (4) Fiduciary services to corporations: (a) Trustee for bondholders. There are many cases in which trust companies figure. (b) (c) (d) (e) (f) Transfer agent. . trustees. has required an arrangement which merely approaches the practical division of activities above outlined. cannot be strictly followed in a legal treatise. However may be from a business point of view. Agent for re-organizations. contracts.6 TRUST COMPANY LAW [§3 (3) Fiduciary services to individuals: (a) (b) (c) Trustee under will. receivers. books devoted to banking. Committee or Conservator.

A corporain essence. potentially. to those shareholders and stand the same as property in his hands. legal possession does When we others get away from it. is technically. Fiduciary Companies Defined. but an agency to do or carry on something for the benefit of its stockholders. a relation aptrust. because thereby. Technically. or in the exercise of judgment and discretion. though manual possession may change. The services he can perform. as a principal for its the ordinary corporashareholders and bring in who resort to we reach the fiduciary rela- . for which he should fairly account.CHAPTER Definition of "Trust of II Company"— Protection Names § tion 4. not a trust relation. it an obligation by an emthan amounts to little more ploye to perform service in and about his employment. which. belong. tion. however. whether of a proaching that of a manual nature. This situation is in no wise different in essence from that of principal and agent. In this way there is created between them and the managing officers of the corporation. not. is.

. T. Swan (1898). 67 L. Take for example a banking militate against this. 148. curators and the like. The trustee company. N. the duties of executors. administrators. was held to the same rule of 1. guardians. "Trustee Company" in England. therefore. 7G3. A. corporation that sets up to accept money of depositors and pay it out on checks. and the court con- cluded that the section. R. T. R. the obligations in law. S. Ass'n v. again.S tion is TRUST COMPANY LAW [§5 it my purpose to consider in this still. The courts hold that here Take arises the relation of debtor and creditor. C. 764. work. a warehouseman. Perpetual Executors. 14 L. administrators and trustees for pecuniary reward. in investing the funds of a trust. etc. attaching to which are as well defined as some of the things above spoken of. 79 L. 587. and there is bailment with liabilities of bailee differing according to fixed principles in the law of contract. claimed to refer to investments. land a fiduciary company is called a "Trustee Company" and it has been defined to be "A company incorporated by statute and authorized by special act undertake the duties of executors.. a storage company. but which may there are considerations intervening. in fact referred only to deposits. P. In Eng§ 5." to 1 In this case distinction is discussed between the powers of ordinary trustees and trustee companies. a common carrier. 141. J. For example. What then are the kinds of cor- porations which represent the relation of which it is intended to speak? Generally it may be said they are those which take the places of individual trustees In addition they as known to courts of equity. C. include the performance of other duties.

'Trust company' might almost be regarded as nomen generalissimum for financial and promoting The question in this case being one of companies. State State v. v. as a matter of common knowledge. that to say." did not under constitutional limitation include nor express any object of legislation respecting safe de3 posit and trust companies. "investments or Government tee securities. Central Trust Co. . which may be regarded as germane to the purposes of the modern trust company. as such companies are. 1890" America. But in this country the phrase "trust company" seems not so confined." It is noted that "Trusspecifically Company" is. named under what is called the "Trustee of England. 67 Atl. L. 3. is by no means a simple task.§6] TRUST COMPANY DEFINED in 9 liability investment is of to funds to be as an in ordinary real trustee. The court recites the history 2. it was held the sources of the in 2 Statutory Trust Company would not be particularly considered. It has been said that "The enumeration of the forms of transaction. 683." tax on gross receipts. 268. 100 Md. 267. Act. 64 Atl. If we consider the problem from the standpoint of the variety of transactions in which. 73 N. that class of corporations currently engage." The question of the meaning of the phrase "trust company" was more directly involved where it was claimed that the title "an act concerning trust com- panies. § 6. (1007). Twining (1906). but these sources were in "all kinds of business which fairly fell within the powers usually found in their (trust company) charters or currently conducted bv receipts them. J. 1073.

Supp. Y. (1900). 5. 773. but it was empowered to do these things and had other corporate powers as well.10 TRUST COMPANY LAW [§6 of trust companies as known to legislative usage. but there are other things not it it particularly of a trust nature.'" 4. Div. 66 N." By is this we get the conclusion that a trust company not exclusively such. . 54 N. Venner v. Thus it was said: "A trust ocmpany. App. 271. they matter of common knowledge. say- ing that: "It is after these companies trust powers. that had been clothed with extensive as trust companies. is defined by section 2 to mean any domestic corporation formed for the purpose of taking. and of loaning money on real or personal propIt would seem that the policy of New York erty. may of its be empowered to general appellain perform. Farmers' Loan & Trust Co. a trust company was not a corporation solely devoted to the accepting and executing of trusts. including not only such corporations as were trust companies eo nomine. it would appear that common par- lance and by general understanding. when so used in this chapter. Italics supplied. were commony known and designated and the Legislature in applying to companies' adopted the popular the title them the name designation. which does not rob tion of trust In New York company. accepting and executing such trusts as may be lawfully committed to it and acting as trustee in the cases prescribed by law and* receiving deposits of money and other personal property and issuing its obligations therefor. 273. * 'trust * * It results that of the act of 1899 expressed the object of the act to be legislation concerning trust companies. but all corporations which had the functions of trust com- panies and were recognized in legislation as such. Y.

v." but "it is very obvious that trust companies are not. is New York it statute that "acts as agent for corporations in reference to the issuing. in money and securities for money in such a way as properly to bring the shares of stock held by individuals therein within the definition of 6. though if a corporation under such a name were clothed with other powers. Neff (1900).§6] TRUST COMTANY DEFINED 11 not to confine such companies to a purely trust business. it deposit. and so deal. it is true. Y. 408. differentiates them from banks as follows : "It is evident from this enumeration of powers." In a New York granted to trust companies under not of strictly trust nature. that trust companies are not banks in the commercial sense of that word. it is pointed out that statutory "trust companies exercise the powers conferred upon individual banks and bankers. Central Trust Co." to say nothing of the provision that it "acts as guardian for the estates of infants. latitude in description would be indulged. and invest therefore. as admirably said in State supra. and do not perform the functions of banks in carrying on They receive money on the exchanges of commerce. Court of Appeals case. engaged in the business of bankAmong other things in the enumerated powers ing." rather seems to indicate a more definite confinement of its activities. in the legal and commercial sense. The Federal Supreme Court in considering the New York statute regarding trust companies. The English term. 320." a relation defined by specific statutory provisions. moneved Jenkins v. 57 N. "Trustee Company. but the presence of such power assisted its charis acterization as a trust company. in loans. E. as a general rule. . 163 N. registering and transferring certificates of stock and bonds and other evidences of debt. 330.

is less than that impressed upon shares of stock capital in the in national banks. its capital. by a trust company purely as a trustee. jected that a trust company under a general grant of power to "execute trusts of every description" had no corporate capacity to act as committee of a lunatic. sustains a relation to depositors and creditor. Equitable Trust Co. but they embrace a merely statutory relation as well. Mercantile Bank v. but it does recognize that a trust company. 30 L. 42 Atl. negotiable 8. 138. v." A Pennsylvania case is interesting as showing how broadly the words "execute trusts" may be construed and also as showing that an opposing trust company in the case was brought in as a mere bailee. 121 U. But we fail to find in the record any sufficient ground to believe that the rate of taxation. must be presumed that it had such The words "trusts" therefore. and that it is in business as a trust company to make money in the investment of such deposits and of other funds similar to that of banks. title. power. S. is seen not to be it confined to those of purely equitable nature.12 TRUST COMPANY LAW [§7 hands of individuals as used in the Act of Congress." 7 This language surely does not apply to any function or title held. supposably It was obunder statutory powers conferred on it. 544. 190 Pa. Ed. which in fact falls upon this form of investment of moneyed capital. (1899). The de- fendant trust company came into the suit as having in its possession as a depository. 895. as granted other powers. viz: debtor belonging to § 7. but 8 the court ruled that in the absence of specific restriction in its charter. New York (1887). 1022. Garis et al. a box kept for such purpose containing certain muniments of 7. Enlarged Sense Given to the Word "Trust. .

embracing the doing of other things than to "execute trusts of every description." irresponsible To prevent upon the standing pany. "execute all trusts. App. The trust company was recognized under the rule of comity. limits the names available to corporations of various classes 9." The reasoning of the Pennsylvania court as to the broad meaning to be given to the words. The New York statute was somewhat more it specific than that of Pennsylvania." is followed in a Missouri case. This legislation in its highest form. Triest (1888). § 8. no method for appointment of a guardian for a nonresident. pany to execute all such trusts as may be committed or transferred to them by order of the supreme court. 1." it has been to prevent the use corporations other from trading implied form the term "trust comfound necessary to enact legislation of the word "trust" in the titles of than those formed under the special corporations laws of states providing for trust companies. or by a surrogate or by any of the courts of record. and not those defined by statute. 29 Mo. Nevertheless if trusts of purely equitable cognizance had authorizing the trust com- been meant. there is nothing in the statute itself specifically to the contrary. Probably both of these trust companies possessed similar chartered powers. an individual being the Missouri statute provided committee of his person. and also makes it Glaser v. Protection of the Title "Trust Company. . where a foreign trust company sued in that state as committee for the estate of an habitual drunkard.§8] PROTECTION OF NAME 13 securities and personal property belonging to a lunatic for the possession of which his committee was suing:.

Missouri. A re- view of cases involving this question will illustrate the practical manner in which this is carried out. 10 L. 758. International Trust Co. 452." or "The International Loan 12 The and Trust Company of Kansas City." It was. International Loan 12. and to have more or less confidence in our own corporacitizens 10. 82 Pac. "trust" from its title. and also to protect our own be supposed to be familiar with. Pacific Title Nichols (1905). v. Sargent (1915).: 14 TRUST COMPANY LAW [§9 criminal to use the law. has been held its that a pre-existing corporation may not change name 10 so as to use the word "trust" without violating the law. 271. A. & Trust Co. "The International Loan and Trust Company of Kansas City was prohibited from using this name in Massachusetts where was a domestic trust company named the "International Trust Company. 26 N. word "trust" except as authorized by it Under a statute of this class. R. 153 Mass. 40 Wash. and engaged in any business named in it. . (1891). 11 but such a corporation will not be compelled to eliminate the word § 9. Protection of Particular Trust Company their adopted titles the Names. or nearly identical name of a foreign corporation en- gaged here in the same business.. 693. 741. from the injury which they might receive through the use in this state of the same correct. who may State v. however. and Trust Co. 437. 11." decision was placed upon the following ground there "We name was is think it is clear that the defendant's corporate it so nearly identical with the plaintiff's that would be misleading. Fiduciary companies are protected in the use of same as other corporations. Ore. v. 144 Pac. permitted to operate under the titles "International Loan and Trust Company of Kansas City. and that the ruling to that effect But we think the object of the statute was to protect corporations organized here. E.

there did not carry on busi- ness under such name. 13. a foreign cor- poration carries on business under a name in fact the same as. and other ing the use of this observed. v. and noto be body would suffer. as distinguished from New Jersey. or nearly if it identical. was protected against infringement by a corporation of 13 Thereanother state. and engaged in a general trust business in Pennsylvania. v. therefore. under the general corporation laws of Delaware. even tion if the corporate name of a foreign corpora- was the same. with that of a its domestic corporation. such a case.§9] PROTECTION OF NAME 15 tions from being misled. should be enjoined. by the identity If. that of a domestic cor- poration. and the foreign corporation ought not be allowed to escape liability on the ground that. and the domestic corporation suffers. . or it nearly identical with. Central Trust Co. its corporate name is not. it was among other things that: Philadelphia Trust Safe Deposit & Ins. is the same or similar. in it appears that "The Philadelphia Trust. its in or similarity of the names. yet similar one." porated under the laws of Pennsylvania. 7S9. (1906). while the name that it actually uses. The Defendant organized states. Co. title by the Delaware Company. monly in use." A case where the name of a trust its company comfull legal title. of 111. Co. is found in the Federal Reporter. see Central Trust Co. but under a different and dis- would seem should be enjoined. Safe Deposit and Insurance Company" had become generally known It was incoras the "Philadelphia Trust Company. however different be. using the name "Philadelphia Trust Company." In restrainDelaware. 149 Fed. Philadelphia Trust 123 Fed 534. On the other hand. its cor- porate name might The public is misled. No no reason why it harm would be done. 1903). That the courts favor that corporation that first lawfully uses the name.

but there was evidence that it was profiting by the complainant's standing in disposing of them from its New York office. by requiring it to add the word "of Kan14 The sas" to its name. whereas the defendant confined its operations to selling securities. good name. as an old and successful corporation. there being. in its New York operations. United States. in so far as the foreign corporation operated in New York. according to the affidavits. C. 16 TRUST COMPANY LAW [§9 if "While a corporation generally. in that it was intended that the de* * * fendant should unfairly take advantage of the credit. 44. court remarked that "The name 'Loan and Trust Company' is not an uncommon one. to the public. . N. to the prejudice of the complainant and in fraud of the public. Y. 1 N. no less than seven 'Farmer's Loan and Trust in the Companies' activites. 21 Abb. in judicial it confined to the use of its its corporate name proceedings and transaction of business. reputation and business standing of the complainant.: . just that the selection of the The conclusion is almost irresistible name of the defendant was unand inequitable. v. and the public was being deceived. is not invariably. Farmers' Loan and Trust Co. 104." The title "Farmer's Loan and Trust Company" was protected in behalf of the old established New York company against interference by a Kansas corporation of the same name. Farmers' Loan and Trust Co. as applied to certain monetary institutions and it would seem that the prefix 'Farmer's' has been applied to designate companies engaged in similar business in different states. of Kansas (1886). by a different name. 14." The two companies were not engaged in the same The New York corporation does a regular trust company business. be generally called. Supp. may by usage.

10 have largely influenced 15. Nebraska Loan and Trust Co. Nine (1889). 6S6. 20 v. 348. N. 27 Neb. The fact that the to word "Nebraska" is a geographical name. Am. Rep. analogy to trade- mark protection.§9] PROTECTION OF NAME 17 Where there a previously adopted corporate name. it was held that the name "The Ne- braska Loan and Trust Company" would not exclude the subsequent use of the name "Nebraska Loan and Trust Company" in another city of the state. appears this decision. 4?. . and protection was no statutory provision protecting was in sought on equitable grounds alone. St. 507. W.

Ed. Rather is it to be regarded as a guaranty against encroachment by legislatures claiming to act within omnipotence where not specifically limited. 25 L. 1079. according to the pole star of construction in our theory of right.CHAPTER III Special and Exclusive Privileges of Trust Companies § 10. and. that our habit is to look only to our constitutions for definite check upon their powers. that powers outside of is specific constitutional limitations. ex indnstria. is like that of statutes declaratory of the common law. 814. need not here be discussed. of right of every citizen in expression. 1 S. we manage to get along without having to say what are legislative omnipotence. it manifesta- tions. in stitutions. In essence confers nothing and is a limitation on nothing. 101 U. It certain they are not omnipotent so far as bargaining police Stone v. Whether legislatures in this country without re- straining influence of constitutions. Constitutional Provisions in Their General Aspect and Police Power. is concerned. away 1. generally. . It is certain. not previously existing. would possess the is ascribed to the English parliament. The principle of equality and under the law finds its our federal and state conin its various This expression. power for the future Missouri (1879). however.

33 L. 108 N. Co. 11. 219 U. Springs (1905). the best we are able to do is to speak in gen4 And it is paramount to any rights under eral terms. through their legislative assemblies. v." its extent. 55 L. it seems that the problem may afi fect or give color to the quality >r kind of o mstrticti< <n of constitutional restraints. but the pole star above referred to comes into play so as to justify all enactments seemingly against equal rights under what is popularly known as a state's police power. whether they be strictly in such form or read like grants. that insofar as there are grants of power by our federal constitution. S. however. 2 This would imply that the people of a representative form of government are. Ed. 473. (N. Viewed from this standpoint. & Q. W. v. save as they are restrained by a superior document more directly emanating from them and called a constitution. R. R. 49 L. 561. 2. 199 U. 643. 1175. omnipotent. 4 Ann. 5 There seems no barrier contracts between individuals. 21 5. a something defying definition fully satisfactory either It has been said that in inclusiveness or exclusiveness. to its effect except in the "fundamental rights secured by N. Ed. Ed. 131 Iowa 340. L97 U. Co. 3 Ann. Manigault v. Co. McGuier I I . (1906). L. Cas. Jacobson v. 467. S. Cas. 765. R. Illinois (1906). & Q. Ry. B. 200 U. v. Chicago. these operate against the unlimited right of contract and may take away vested rights acquired thereby. 50 L. Ed. S. S. 297. 902. & 3. fixed or rigid formin any power) "To embalm it( police ula would be to destroy its value. and thus defeat the ends it was in3 When it is attempted to describe tended to promote. B. for it would then be deprived of its indispensable quality of adaption to changing conditions. We see.) 706. 596.: §10] POLICE POWER 19 Tome. 50 4. restrictions in a constitution should be construed with narrowness. Massachusetts (1905). Mottley (1911). A. S. at least. Chicago.

48 L. Kansas City (1012)." federal police power not being here spoken imagine that the federal police power. 57 L. 1895. I 6.). was said: "The individual surety. 227 U. 195 Pa. 2. U. bilities powers and lia- against the natural person.. 520. Ed. v. 511. 7. S. the court appeals to its judicial knowledge as to the difference between an individual and a corporate surety so as to justify the charge upon an estate. which our supreme court has called to the aid of the constitutionality of the '"White Slave Act" also is subof. R. 46 Atl. SCO. as § 11. Discriminations as Between Corporations 8 and Individuals. (191?. I ject to the specific grants of 7 power found in that consti- tution. Hoke 90r. where. as formerly known. A. 127. R.' " Then after enumerating the various purposes for which corporations may be chartered. The act of incorporation 'itself is a discrimination as to privileges. 587. was usually a relative or a friend who had confidence in the principal and voluntarily assumed the obliIt gation of answering for the latter's faithful perform- need not speak of the individual who became surety for pay. for the very name of 'professional bail-goer' is a reproach to every branch of the ance of duty. S. 198 Fed. 43 L. In a Pennsylvania case.) =5.20 TRUST COMPANY LAW [§11 the federal constitution. Re Clark (1900). 323." in regard to authorizing trustees and others to charge an estate with the reasonable fee paid a company for becoming his "The objection wholly fails to surety. S. A. . the opinion says : "The single question in this case is the constitutionality of the act of June 24. v. 308. St. notwithstanding that no charge could be made where an individual surety is obtained. the court said: observe the fundamental distinction between corporations and natural persons. (X. Kansas City Gas Co.

§11] CORPORATIONS AND INDIVIDUALS 21 administration of justice. however honest and well proval by the court. It was further said that "Pri- Vrooman (1894). as to the sufficiency of his friend. come under the police power of the State. Of the happening of any of these contingencies. A. Both of them." is interested : that relates to Com. 44 Am. nature of investment and management of which are known and within constant sight of the court and parties interested." The court deemed this ruling w ell within the r prin- ciple previously declared in that court. This police power was thought to be exemplified. which he was allowed to contaminate with his presence. which brings his estate into the administration of the law under wholly changed circumstances. * * * It is on this difference that the discrimination in the act of 1895 is founded and it * is new surety. 603. 8 though to my mind it it is an extension of the former ruling in that directly authorizes the levy- ing of a charge on private property of a third person which the former decision does not do. the only is person in position to keep close watch the principal. 30 Atl. R. "in view of the magnitude and the nature of the insurance business. 217. St Rep. the amount. the is qualified at the time of his ap- liable to the contingencies of busi- changes of value in property. 25 L. making it "apparent that the public it. 306." in all 8. But the voluntary surety. that the legisla- ture lawfully might confine the insurance business to corporations. 250. and the inexorable chance of death. . 164 Pa. v. or to of rinding a the surety must have a capital. ness. and his interest is averse to making * * known any doubt assume the burden the other hand. however. company * * * On a fair and constitutional basis for the legislative dis- cretion.

if statute attempted to confine it to cor- At all events. States Ins. 58 L. 1011. . managein the state can compel a fair measure of fidelity ment of these vast sums. decedents and ccstnis que trust in relation thereto. has 10 to since been declared by our Federal Supreme Court. persons may be allowed to execute the same trusts. and only when. They cannot be tal restricted in the use of either their capi- or their profits as corporations may be." That the Pennsylvania court them must trust is correct insofar as it declares the business of insurance juris publici and subject to governmental regulation. There was no question here of the right of an individual to carry on such a business porations. The United 10. they may authorize corporations to charge the estates of minors. the business is in the hands of corporations. and provide for the safety of the insured when. though private that a 389. their financial condition or the character of their investments. the dissent going mainly on the proposition that regulation did not extend to fixing rates. 'They cannot ordinarly be compelled to disclose their business methods.22 TRUST COMPANY LAW i [§H vate individuals are not subject to the same visitorial powers" as corporations. which there was dissent by three of the eight members sitting. these two Pennsylvania cases tend to show that corporations may be given the exclusive right to carry on business affected by a public is interest. Those who deal with more to their personal integThe rity than common experience shows to be safe. German Alliance Lewis (1914). Supreme Court has held Co. and that as the business so affected. Ed. S. 233 U. v.

Johnson v. Minnesota Loan and Trust Co. 88 Ky." In Wisconsin. see also Weed v. 111 Pac. 8 S. 25 L. 13. (1898). 123. 664. Nevada State Banking Board R. A. 232. v. 40 Minn. ed. R. Johnson (1889). W ( . 5. 55 L. Payne (1887). Bergh (1910). 333. . W. 2 L. 1 question was again considered in the case of a statutory trust " company appointed a guardian of said: a and the court it "If be constitutional for the Legislature to confer upon this corporation the power to act as statutory guardian. 121. 569. Dollev (1911). 11. 856. S. cannot be considered as unjust discrimination. Bank of Commerce v. Beebe 1889). 33 Nev. "' The question one of legislative policy. 219 U. 7. A. and we think it is constitutional. In Kentucky discrimination between corporations and individuals has been adjudged valid in a statute requiring individuals as assignees in conveyances for the benefit of creditors to take an oath and give bond and state " merely requiring that the capital of a corporation "shall be taken and considered as the only security" necessary. 14. it follows that the legislature has the power to prescribe the terms upon which it may act as such guardian. the court said: "The fact that it gives no bond except in the discretion of the court.) 1217. 81 S. 86 Ky. (N. W. 97 Wis. 10y 2 W. 275. 418. 14 In a Minnesota case the point was directly made that the general law. under which the trust company party was incorporated.§11] DISCRIMINATION 23 might provide "that no banking business should be done except by corporations. 446. 12. invalidate is Such reasoning would many just and statutory laws. 74 X. 141 Wis. v. 124 v. contra Marvmount _ (1910). S. 41 N. 11 S. Wisconsin Trust Co. gave special and exclusive Assarie State Bank v. but gives security by deposit- ing securities with the state treasury. W. 11 The same minor. Roane Iron Co. 29 5. in answer to the claim of unjust discrimination in favor of a corporation and as against private individuals to act as assignees without bond. W.

coming as it does under police power. all of which are of statutory origin and creation and to such offices there is no personal privilege other than as defined by the . the trust company becoming the favorite method of administering estates and executing trusts. generally. It is to be noted that these objections apply only to appointment of executors. And the courts generally have overruled the objection upon the grounds that the visitorial power of the state and requiring deposit of securities virtually take the place of sureties given tion it is by individuals is in like instances. seems not to have understood the that in nature of the objection. guardians. committees and assignees. or in the discretion of the court. but rather upon the frame of legislation under which the power has been conferred. administrators. which at best are but privileges under statutes of descents and distribution. from the giving of bond with sureties for the faithful performance of the trust reposed in them. The court.24 privileges TRUST COMPANY LAW [§11 was noted but apparently was It is recited little noticed. that the objection upon which this grant of exclusive right as against an individual to act in a fiduciary capacity has turned not upon the competency of legislatures to endow a corporation with such right. At all events legislation along this line appears too fully recognized in this country for courts to stop to listen to objections of this nature. and especially as it concerns rights in the devolution of estates. indeed. This has excused them wholly. stability in this In addi- said there more of than in personal sureties. fast many of the "is states." It is to be noticed. all of which constitutes a basis for rational discrimination under constitutional restrictions. particularly the older ones.

Walker (1^42). this is So far as the creation of trusts by acts of but the upholding. trusts have been adopted to supply the place of uses and the former inability to stand seized to a use no longer prevails. and distribution is. Henry VIII. there as to those who was a limitation of restriction could stand seized to uses. 38 Am. under its police power. Sinking Fund Com'r 185. v.§12] DISCRIMINATION 25 statute itself." Right of State to Deny Certain Powers to § 12. J. 1 Other Than Corporate Fiduciaries. on the whole.) 143. settlors. as descent its and estates decedent said above. 433. Dec. 15. 6 How. I have no specific authority to prove that the state might require. If conceived that personal statutory fiduciaries were. and its police power once vested over estates of minors and the insane is very broad. 10. and of holding real or personal property may hold as trustees. Corporations may now hold as trustees. I think that the tendency of these times is so greatly towards this form of protection that it is not unlikely that its we shall see in many legislative enactments for advancement derogation of the individual fidu- ciary. but since 15 the passage of that statute.of the right of contract and the old idea of a corporation not being competent or qualified to act as trustee seems thoroughly exploded. (Miss. that no individual should be accepted The power of control over as a statutory fiduciary. . there would seem no obstacle to its forbidding the former. very ample. As to this it was said by Sharkey P. The general persons capable of confidence. c. far less reliable and safe than trust comit panies. that: "Before the statute of uses. 27 16. although they rule now is that all could not be seized to a use before the statute.

Preliminary. to ascertain their fiduciary fitness. it might be said their is or discretionary duties. are not deemed them all trusts of defined indeed. further. Moreover an institution which many lines independent of business conditions is any single branch of commerce. or holds is itself out. however otherwise occupied in the affairs of unfitted for the law reposing in life. With press. company may trustee whether according to the strict relation of and cestui que trust or as the holder of funds statute. an implied. It has been shown that a exercise the powers of a statutory trust fiduciary. because it applies. while the other deemed to have a trust thrust upon him. the corporate fiduciary there more than if in the case of a personal fiduciary. Thus an old English . It is or property belonging to or for the benefit of another where obligation and duty are defined by seen. for appointment. not an ex- warranty of fitness. that trust it is not inconsistent in law. experience in their serves in own is affairs looked to. that a company shall be vested with other powers. In this regard they are not unlike individuals who.CHAPTER Qualification of Trust IV to Company Functions Assume Fiduciary § 13.

§14] COMPENSATION 1 27 2 case is quoted from by our Federal Supreme Court. McGuire (1914). 905." 3 allows compensation to a trustee. W. Co." where only thus because of the com- pensation therein. 133. but 1. 256 Mo. notwithstanding that the American rule. S. Such a 5 fiduciary's duties are publici juris. (1913). that should earn in the exercise of that power such compensation as will maintain its solvency. Renshaw (1914). German Alliance Ins. to charge. 2. v. Co. (1915)." Sec. 131 and cases cited. is 4 And as a corporate fiduciary it given particular power as a business agency nat- urally would be deemed not only requirement of. are more strictly con- strued against them than in the cases of personal vol- untary sureties. Like the compensation to which a it common entitled carrier or an insurance company. Ark. 209 Fed. but it in strict public policy. said: where the Lord Chancellor but trouble by it. in accordance with. Lewis. 165 S. 130. 91 Kan. May v. 105. Empire State Surety Co. Justice v. the rule strictissimi juris being held not applicable to the former. v. as distinguished from the so-called "English Rule. Ed. supra. (1897). 167 U. not only is may be required to charge reasonable Uvedale v. "Trust Estates as Business Companies. . § 14. State v. Cas. 2 Ch. 314. Necessity That Trust Company Should is Receive Compensation. It could not be objected to a trust company it that is it "should be ambitious of a trust. May 5. Federal Union Surety Co." "I like not that a man should be ambitious of a trust where he can get nothing Our court applied the sentiment thus expressed. Ettrick (1682). 4. 74. 170. 136 Pac. L63 S. Lackland v. 3. in the absence of provision therefor in the trust instrument. 42 L. The rule quite familiar that the contracts of surety companies in the business of furnishing indemnity bonds. 1171. Massachusetts Bonding & Ins. W. 310.

to serve without By like I think it generally may be stated that a trust instru- ment may either require or the trustee before entrance waive requirement of oath by upon his duties and it is only office where an oath is required for induction into I of a need here consider. R. (43 U. § ante. v. such companies engaged in the business of executing Therefore." 195 Pa. A. 520. yet that doctrine has been long since exploded as unsound and too artificial. statutory fiduciary that was in early times held that a corporation could not take and hold real or personal estate in trust upon the ground that there was a defect of one of the requisites to create a good trustee. naturally it would not permit such a company it peril its solvency. may 11. 11 L. 2 How. 48 L. and it is now held that where the corporation has a legal capacity to take real or personal estate. 187.. 587. viz. there it may take and hold it upon trust in the same manner and to the same extent as a private person 6. 205. The visitorial power to be exercised not as to a particular estate but with regard to the qualifications of trusts. S. All of the things so well expressed in Re Clark* as reasons for the acceptance of a statutory trust company as a surety/ imply or its may imply duty by the state to see to is continuing solvency. Oath by Statutory Fiduciary Unnecessary. do. although it real and personal property in trust. § 15. 127. compensation and thus imtoken it could demand that charge reasonable compensation. Vidal Girard (1844). the want of confidence in the person.) 127. 7. .28 TRUST COMPANY LAW its [§15 compensation for services and the risk involved. 8. 46 Atl. Ed. Generally 8 "Let us proceed to the it was said in the Girard case: inquiry whether the corporation of the city can take Now.

" the Minnesota statute providing for corporations acting as guardians of estates of insane per- sons. The irregularity in the grant of the letters of adminis- tration cannot be taken advantage of in a collateral prosi. of statutes as to the taking of oath is by individual fiduciaries after all mere machinery of and would not. 41S. R. 232. The requirement the law. I think. however. The "syndic" rule. of which is inconsistent with the plain terms of statute conferring powers on trust companies. Beebe (1889). 2 L. Allen on "The Law of Corporate Executors and Trustees" (190G). To this effect it was ruled against the contention that one was never an administrator because he did not take the oath of office at the time of his appointment and the issuance of said: letters of administration. where entrance upon office is in every other respect regular. Minnesota Loan & Trust Co. 9 The court reasons out the matter according to the holding in the Girard will case. W. N. alluding to evasion England of this technical difficulty by the corporation naming an agent called a "syndic" to whom letters were in issued. and furnished ample protection to all parties dealing with him as such.§15] oath 29 In a Minnesota case the objection went to a corporation's inability to qualify that "it could not take the nec- essary oath. 10. as applied in England presents many difficulties and a sort of ratiocination as to vesting of title in the "syndic" and his dying or ceasall ing his connection with the corporation. 7. . 41. v. A. The c< >urt "The letters issued by order of the court justified respondent in his acts as administrator. 40 Minn. make their appointment void. of these difficulties I For an interesting summary 10 refer to a late English publication.

Harbison (1896). v. 520. but omission to do so does not make his appointment void or subject to collateral attack. Way v. but chancery assisted in this respect merely for better protection. Sullivan (1886). Johnson (1877). 56 Kan. 1 So. Harris v. '9 Utah 101. Chipman (1893). 18 Pac. 13. Ions. 458. Holland (1888). v. 33 Pac. A. 44 Pac. 41 La. Bowman v. 64 Ga." must be regarded as valid until But. . P. B. 81 Ala. St. 150. 10 The same 17 rule applies to failure by guardians to give bond. 78. 13 § 16. Cuyler v. 24 English 67. 3 La. this might be ruled is as to a personal appointee. Qualification by Deposit of Securities. Howerton v. 17 W. 148. 140 Cal. largely a directory provision of the statute that any such appointee as an 11. 834. 46 Atl. Leatherwood v. Wooton (1847). 709. Williamson (1881). Ann. (Ky. 48 L. 14. 20 Nev. Y. 2-60. The giving of a bond by an executor anciently 14 was not the rule. Reports 1089. 6 So. 718. Va. TRUST COMPANY LAW [§16 The letters 11 they are revoked. 75. 42 Pac. therefore. 242. Wayne (1879). 3 Wms. 263. the fact trust that a statutory company is vested with express power to accept if it the office of fiduciary and cannot take an oath. 572. Ann. but testamentary provisions 15 may dis- pense with the requirement of a bond. It must be deemed. R.(1903). 195 Pa. The rule as to executors and administrators applies to guardians it failing to take oath of office.30 ceeding-. however. See.) Amiss v. 17 In re Chin Mee Ho . Hunt v. tor universally is An administra- required to give bond. Levy (1889). Gallagher v. also. 167. Sexton (1889). 673. 213. 127. Brooks 12. 16. 5S7. Mon. 8 447. and as held in Re Clark 12 comes under the rule of lawful discrimination between corporations and individuals. Dayton v. 104 N. 112 Cal. 73 Pac. E. 334. the statute does not require the impossible. Insley (1895). 10 S. 419. 1002. 15. 661. Walker (1848). Slanning Style (1734). 69 N. v. C. 164.

Lassen County v. Purdy 1877). 1037. Plummer v. would be a matter of ordinary corporation law. ( »0.is). and even it has been held that the official bond of a sheriff will cover an administration committed to him ex If as officio. Ct. Healy v. A state to. and under the principle of distinction between corporations and individuals as fiduciaries. . between individuals as officials and individuals in their private capacity distinction in requirement to qualification as a statutory fiduciary it may be made.§17 CONSOLIDATION J 31 administrator or a guardian should give bond. 115. by the law as to the rights of parties in a decedent's estate do not violate due process of law. security in lieu of such bond. were it not for the rule that the duties of a trustee imply per- — is. Magoun v. 42S: Bucldey 67 Mo. Super. 170 U. - The general bond instead of a bond in each estate administered. 2S3. 178 U. McGuire (1ST7). n 1. may control the devolution of property of decedents. Merger and Successorship § 17. 659. S."" Consolidation. 58 Ala. a fortiori be urged that there may be made distinction beand corporations in this regard. it remains to be considered. . under express statutory of a public administrator suffices 18 authority. 127 Cal. 89. S. persons tween It amply appears. 22G (1900). Pac. Illinois Trust & Savings Bank (IS'. and these cases need not again be cited. 19. from cases hereinbefore referred may what are the reasons for distinction between corporate trustees and personal trustees in the giving of bonds. Coler (1900). Status With Reference to Fiduof Trust Companies This ciary Business of Constituent Companies. Ed. 60 State v. whether some substitute for an individual's bond with personal sureties may be taken. even to the extent of forbidding all right of inheritance 19 and therefore whatever discriminations made therein. Ed. 42 L.

v. 264 111. E. 22. That general rule rests upon the ground that the selection of a appellee to act as executor or trustee. E. 111. Chicago Title & & Trust Co. For that reason it is frequently necessary to consider whether a consolidation leaves the constituent companies in existence. and if not whether the new corporation can administer the fiduciary business committed to its predecessors. purchase or merger by which it (a trust company) acquires the franchises of another corporation must * * * 21 In the decision from which have statutory authority. for "any consolidation. 22 In another Illinois case." this is quoted the court held that the consolidation of two trust companies under the Illinois statute effected the dissolution of the original corporations and brought a new corporation rights into existence "possessing the property of and franchises and assuming the liabilities those passing out of existence. This is largely a matter of construing the statutes of a particular state. Chicago Title v. (1914). 105 N. Doyle Zinser (1913). Trust Co. 259 ct al. 718.: 32 TRUST COMPANY LAW [§17 sonal confidence and cannot be assigned to strangers. 102 31. . 489. 21. a fee on the entire capital was exacted. There the court said whether the general "The material question here other is rule that a trustee cannot delegate his authority to an- an obstacle to the exercise of a power by the where one of the constituent corporations was named as such. 790." was whether the consolidated tax for tion. it was held that one appointing a trust company in a fiduciary capacity im- As was held that a pliedly authorizes its successor by consolidation to exeis cute the trust. N. its it The issue in that case company must pay a state its increased capital or on entire capitaliza- new corporation was created.

the power cannot be delegated or transferred to another I f a pi >wer is either by the trustee or a court. 1012. E. because the element of trust in the judgment and discretion of an individual is entirely wanting. Y X Y. as executor and trustee. oo X. Etta Nelson. or given for the purpose of executing a declared trust. enlargement. these changes might occur. if it is A corporation is without personality. 309. and that the Real Estate Trust Co. ficers. App. knew that its directors. and become a Title & component part of the new corporation. 206 140 N. however. or change of the object for which the corporation was formed." Under the New York statute it was held" that a merger extinguished the merged trust company (The 23. increase or decrease of the number of directors. an increase or decrease of capital stock. . might be consolidated with some other corporation such as the Chicago Title & Trust Co. 133 X. Div. or change in the number of shares or par value. n< >t The rule.§17J CONSOLIDATION 3i trustee implies personal confidence in his discretion and judgment. Y. 529.. and the consolidation of the corporation with any other corporation then existing or that thereShe therefore contemplated that after be organized. and that the statute authorized a change of name or place of business. 711. given to an executor or trustee which is not ministerial. and that it would thereby cease to exist. there can be no reliance upon individual discretion or even upon the continuance of the same administration. and selected as trustee or executor. can- be applied to the case of a corporation. in naming the Real Estate Title & Trust Co. affirming Supp. but which involves the exercise of discretion and judgment. of- and stockholders might change from time to time. Matter of Bergdorf (1912). which the court can enforce.

. It can withhold or grant the right. but that of the Legislature. In reading the sections we do not regard the inten.it may make its exercise and its extent subit ject to It such regulations and requirements as pleases. A They testator intends and must be deemed to intend the results which the operation of those rules produce. which the designation of it as an executor originated and thereby entitled the latter to the executorship. . upon the ground that it was a continuation of or identical with the merged corporation. on the other grounds. Y. But the court found. Misc. may declare the rules under which the administration of the estate may be committeed to executors and make compliance with them mandatory. 24. and if it grants it. Its exercise to any extent depends entirely upon the consent of the Legislature as expressed in their enactments. 156. The right to is make a testamentary disposition of property . not an inherent right nor is it a right guaranteed by the fundamental law. that the letters should issue to the successor trust company.34 TRUST COMPANY LAW [§17 Morton Company) so that the successor trust company (The Guaranty Company) could not validly base an application for letters testamentary to an estate to which merged corporation had been appointed as executor. thus it was that the testator intended. They said: "The testator in making the will and appointing the executors was and remained throughout the following years of his life sub24 ject to the relevant existing statutes. privilege or interest. Their Compare Matter of Stikeman (1905). if any. 48 N. affect the testa- mentary disposition and provisions as though embodied in the will and in case the cited sections of the Banking Law provide that the merger of the Morton Company transferred to the Guaranty Company the right. tion of the testator.

and things in action thereunto belonging. or interest potential was not complete or vested . and ambulatory." and empowered the Guaranty Company to "hold and enjoy the same and all rights of property. Company was to be lost. From it. issued the absolute interest of an executorship and the power to participate in the control and administration of the the legal fees and commissions. undisturbed until the testator's death. The testator's death did but complete and vest that which testator's estate theretofore existed. Noth- ing appurtaining to the Morton forfeited or destroyed. franchises and interests in the same manner and to the same extent" as the Morton Company would if it "should have continued to retain the title and transact the business of" the Morton Company. interest or asset of conceivable value or benefit then held by the Morton Company (except the right to be a corporation) should pass into and be absorbed by the Guaranty Company. privilege. but also that every right.§17] CONSOLIDATION is 35 language broadly and conspicuously comprehensive. The designation of the Morton Company as an ex- ecutor created a privilege or an interest in the estate of the testator appurtaining to that company. interest or asset of conceivable value or benefit then existing which would inure to the Morton Company under an unmerged existence should inure to the Guaranty Company. privilege. personal and mixed. real. franchises The merger Company "all and singular the and interests of" the and to every species of property. although in an incom- . transferred to the Guaranty rights. Tt existed. This language means "in Morton Company not only that every right. it The privilege was incomplete. and receive That interest had no source of origin other than the will and the designation.

Ignorance on the part of the Morton Company of its existence did not affect it.36 plete. Sec. New York Banking Law. Through it that company would have been an executor and entitled to the letters testamentary if it had "continued to retain the corporation." title and transact the business of such The merger transferred it to the Guaranty Company and in effect substituted that company for the Morton Company. TRUST COMPANY LAW [§17 imperfect and dependent condition. and as such is entitled to receive the letters testamentary. page 289." Since the above decision was rendered the New York Banking Law has been amended. 25. 188. fically so as to speci25 provide for the result reached by the court. the Guaranty Company was designated as an executor. Subdivision (1) Appendix. The Guaranty Company was entitled to hold and enjoy it even as would the Morton Company under an unmerged existence. By virtue of the statute. from the mak- ing of the will and at the time the merger of the Morton Company was consummated. effective as a part of the will. .

that where it has no inand the purposes of the trust are wholly foreign. IT Hun. South New Market M. 101. Seminary v. S 2.v.) 127." or "relating to matters which will promote and aid and perfect those objects. direct or indirect. . Chappell L888). 174. to treat of a cor- poration's general power it to become a trustee. S. Sheldon v. 2 How. L3 X. S. it may be such where it has any interest. 27 L. X Y. where mainly are considered powers of statutory trust companies.'. seems not altogether necessary in a work. Pea'slee (1844). Even though a corporation is not expressly empowered to become a trustee. Jones v . 107 U. ? ( 317. S. It Powers of Trust Companies in General. Y. 189. But it we generally upon appointment of a trustee. . 15 N. H. in the administration of a trust. or that powers be vested with the title and such vesting will pass if its purposes are "germane to ascertain either that may the objects of the incorporation. it 3 cannot take as trustee. (43 U." 1 then we are assisted in construing statutory terms claimed to authorize such companies to become trustees. 1. specific under conferring of authority. Vidal v. Ed.CHAPTER V Diversity and Limitations of Powers. Ultra Vires § 18. 11 L. Ed. Girard (1844).Habersham (1883). 2 terest and the converse is true.

yet so far as a department of their business extends. that ordinarily what are Trust Companies. 562. (1898). The several plaintiffs stood to the company of as follows: One claiming assets in the hands the commissioner to secure through a trust deed executed to the company indebtedness . Thus it was said by the Supreme Court of Missouri* "The fact that respondents are incorporated as that: companies seems to be inconsistent with the relation of that of debtor and creditor. company was trustee under a will and as such trustee had invested moneys of the estate in inadequate security the third. 5. the same as the first. 210." and: trust companies have no right to receive deposits (construing its own statute)." This state is well illustrated in a late case in the It supreme court of Wisconsin/' appears in this case that the commissioner of banking took possession of all of the property of a statutory trust company. of course. and actions were brought for the appointment of trustees. and in favor of the "Trust relation of trustee and cestuis que trust. 150 Wis. but can only receive money in trust and thereby the relation of trustee and cestuis que trust is established between the company and the customer. is true. claimed that the commissioner had no right to adminanother. W. rel. et al.38 TRUST COMPANY LAW [§18 While called it. that the . Kuolt (1914). Sullivan v. may. the word "trust" would seem to have the meaning it has at common law. ister said trusts 4. and they asked for the appointment of v. 145 N. W. 40 S. . They also sued in behalf of numerous cestuis The complainants que trust ent who were scattered. as I have suggested. 72. Lincoln Trust Co. and. 144 Mo. should be organized for other than merely trust purposes. State ex 593.

or a new trustee. continue for many years and call for duties wholly foreign to that of the commissioner of banking. and not for the purpose of carrying it on.§18] l < I W l R - 39 another suitable trustee. whether such only was imposed on it by a court by agreement of parties or by operation of law. This on the one hand the commissioner implies two parties : of banking. that being the purpose for which possession To do that. the party settled with ccstuis que trustent — in the case of numerous * * most conveniently their trustee. But it must be liquidated and closed. But for what purpose does he take charge of it? The statute It is for the purpose of liquidatis explicit on this point. trustent. * * * The whole statutory scheme is to wind up the business of the insolvent corporation as soon as is consistent with good business management. representing the stockholders of the Trust Company as well as the creditors generally." The court further says the insolvency and the taking over of the business of the ' company "terminated its trust still capacities. The Supreme Court was engaged said: "The Trust Company in business of various kinds. among others that of executing trusts. it is his duty to take charge of its property and its business. and its disqualification to act as trustee exists. Some of the trusts set out in the complaints will by their terms. The trial court sustained a de murrer to the several complaints. and turn over the unexecuted part of the trust to them or him. he must settle with the ccstitis que is taken. ing it. Whenever in the opinion of the commissioner of banking it becomes insolvent or unsafe." This opinion seems to me to involve that the trust . and on the other. He must also settle with every other creditor of the Trust Company.

: 40 TRUST COMPANY LAW [§18 company will be considered wholly apart from its other business and that insolvency or dissolution will work a cessation of its trusteeship. including trust property. While death of an individual trustee does the same thing. acting as guardians of infants and insane persons. The court said a. when there would be possession taken as where an individual and it his executor or administrator takes pos- an important distinction between an individual trustee and a corporate trustee." The court here was merely ing what could be done in a sort of interregnum trustee dies session. upon taking possession his insolvency does riot. And while he so holds the trust property. which included the handling and investing of the money of others. venture are altogether repugnant which the Missouri Company was formed. The Wisconsin court also observed in the course of its discussion that: "Of course. to take new trustees can be appointed charge of and execute the various trusts. where engagement was to act as trustee of another corporation. which I Just here seems to me is will discuss hereinafter. it is his duty to confor a reasonable time until serve and protect it as far as possible until new trustees indicat- can be appointed. relations of a statutory trust nor should corporate insolvency unless there is also a taking possession of its property. The company fact that one of the features of a statutory trust is that it is a fiduciary its is strongly stressed in virtually a late Missouri case. the commissioner of banking holds all the property and business of the corporation. and "The hazards of such to the purposes for guaranteeing the fidelity of persons holding places of . executing trusts under deeds and wills. so far as title and successorship are concerned.

2050." that the purchase of the view indicates that the fiduciary character among its powers affects. It must be held to contract with all entrusting to it such business. "Necessarily it (the corporation) is The acts court only through its official boards. 359. Mississippi Valley Trust Co. judgment. honesty and reasonable skill in these places and that they will bring to the discharge . if these statutory trust companies could be thought to acquire 6. 610. In a Kentucky case particularly to a trust 7 there is a discussion relating company as an administrator. Co. V. Richard Hanlon M. v. important as showing that the interests of distributors of an estate are apart from that of the trust com- pany and are not governed by the principle that knowledge by an officer where he is acting adversely to the corporation said: not notice to the corporation. Gcrmania S. requiring the maintenance of a high standard of credit and stability on the part of that company. as a matter publici juris. of their duties to these estates not only their skill.§18] POWERS all 41 public or private trust. L. 23 Ky. . 7. 553. W. It is impossible to escape the conclusion Kansas Company's stock was This beyond the powers of the Missouri company. the private contractual powers of the corporation. 66 S. that it will select men of prudence. Indeed. any real title (lOlS^. but that whatever knowledge they may have wherever and whenever obtained. will be used to protect these interests exactly as if they were acting personally as such administrators Or trustees. Driskill (1902). 158 S. W. & Trust Co." The principle here decided goes to the very heart of the question of like responsibility of corporate trustees to that of individual trustees. but all the reasoning covers It is its fiduciary relation in respects. 251 Mo. v. Rep.

i. D. J. an excellent illustration of the fact that. who took up other duties so incompatible with their obligations to the administrator that they could not give the estate the full benefit of either their sagacity. can only have such knowledge as is in the brain of its officials or in the records that its servants have made for it. v." The company therefore.. . 67 N. their prudence. was held affected by the knowledge of its president of a fraud he had perpetrated on another company making it insolvent thereby and unreliable as a place of deposit by the company of money belonging to the estate held by it as administrator. The adminisvery admirable that trator's caution cials. therefore. that it has selected negligent.42 TRUST COMPANY LAW [§18 to fiduciary property in their hands and thus make the principle as to notice above alluded to apply. 007. the principle to which I have referred. 58 Atl. the inter- between their trust business and their other business would become such that their liability as trustees would become a delusion and a snare and personal relations delinquency of their sure defense. Lord (1004). officials constitute in many cases a What the court further says on this subject it is so ought to be reproduced. or even rascally officials. e. 489. not be heard to say. is the caution exercised by these It will offi- Its conscience is their conscience. Camden S. that knowledge possessed by an officer acting in the perpetration of a fraud will not be imputed to the Jersey case is : A New 8 8. which I do as follows: "In the state of case in hand the administrator. viz. & Trust Co. if a trust company acts in another than a fiduciary capacity. Eq. their their judgment or knowledge of affairs vitally affecting the trusts committed to them. the trust company.

They receive appointment from the courts in trust capacities without giving a bond. (1909). S. 60 N. 551. A.§19] ULTRA VIRES 43 acting. 196 N. . Speaking of trust companies it was said their "powers and purposes are primarily fiduciary. committees. Ultra Vires as Affected by Fiduciary § 19. 24 L. (1S97). in effect that questions of ultra vires were treated very differently when they concerned merely a corporation organized for business or trading purposes than where they occupy a fiduciary position. Y. 11. work is guardians. 134. 158 S. Their primary of a trust capacity and to a large extent they take the place of individual administrators. v. Hampshire Trust Co. R. (N. H. "The legislature indemand that trust com- 10. receivers and trustees. 44 Atl. 476. Tucker Gause v. (1913). Co.) 967. W. 927. Mississippi Valley Trust Co. 359. Richard Hanlon M. 187. 25 Mo. in consider- ing the effect of ultra vires acts have always recognized the distinction between business and trading corporations and corporations whose purposes are largely Further along this case says : fidu- ciary. Co." tended and the public interests panies shall be confined not only within the words. is Hampshire case" refers to discretion by a trust company as to deposit by a trust company of funds it held as trustee and shows that it was excused as to loss in securities back of the fund deposited just as would have been excused any other trustee. Power in a Corporation. 10 speaking 11 on the same lines as the Missouri case supra intimated. will not be corporation in whose behalf he applied. * * * The courts. said. E. Commonwealth Trust v. but 9. executors. 89 N. As lending aid to the view that corporate trustees are held to a more restricted construction of their powers a directly A New New York case.

Guardian Trust Co. 86 S.). R. S. but see Continental Trust Co. 148. Guardian Trust Co. 769. Dean (1908). 58 S. 14. 786. Pac." This case was 12 later expressly confirmed by that court. Northern Trust Co. Fitchie v. Wright (1900) (Tenn. 670. also. Brown v. 81 Wash. . v. 755. 247. and the principle of estoppel has been applied to prevent one who had made a note to a corporation as administrator from defeating recovery on the ground that the corporation was not authorized to act as administrator. see. 515. 244. W. 53 Law. First 494. v.44 TRUST COMPANY LAW [§19 also within the spirit of the statutory provision which declares that a corporation shall not possess or exercise to the exercise of the any corporate powers not given by law or not necessary powers so given. A. named cannot 13 the court appoint some one That a trust company may not "take advantage of its own wrong" by itself pleading ultra vires has been 14 held in a Missouri case. E. 203 N. W. v. Ct. 15. Creditors' Claim & AdjustNorthwest Loan & Trust Co. 331.). Davidge v. Union Bank & Trust Co. 107 N. Y. 321. v. where it was held that the appointment of a corporation as an administrator was a mere nullity and subject to collateral attack. 187 Mo. ment Co. will for lack of a quali- If a trustee else. 211 U. W. (1911). Ed. 102 N. (1914). 142 National Bank 109. 751. 79. The fact that a trust company fail is acting ultra vires 13 will not affect the validity of any trusts committed to act. (1905). it. 96 N. (1913). 70 L. Peterson (1906) (Neb. 15 12. 13. 259 111. Equity never permits a trust to fied trustee. 30 S. E. Rep.

Often. Sec. The well settled theory that an artificial being like a corporation is strictly limited in its powers has a seeming exception in the principle of acts done or abided by from which benefit is derived or presumed. this exception is more strictly applied to corporations of a merely private nature and for business purposes. Agents.CHAPTER VI Extension of Functions of Statutory Trust Companies. Corporation Limited to Charter Powers. however. This exception also has sometimes been applied as 1. Guardians and Committees. Banks. Sureties. so often held by our supreme court to be a constitutional right. Receivers and Assignees. 19. them to merely because their charters submit are ruled to be precluded from invoking the doctrine of publici juris and subject to regulation as such ultra vires notwithstanding their acts or negligences in the liabilities they reap seriously interfere may with the performance of their public duties or the rights of their stockholders to fair remuneration upon invested capital. corporations. 1 above. . But as shown § 20. Guarantors and Underwriters. whose business is and not regulation.

Higby Higby Co. 5. 144 Mo. 18 Ore. A. 593. W. same way as tent is Maxims of construction are applied to the powers and rights of fiduciary companies in the to other corporations for profit. may confer power. 106 66. (1906). State ex rel. 557. Y. (1911). 303. All of this. 15? Mo. 7 L. McClure (1898). copied The express enumeration 4 of powers excludes ius. 563. 382. 118 7. W. Crow v. 75 Mo. 46 S. N. . Killingsworth Portland Trust Co. dent to express powers"' (the principle carries with incidents) but not so as to include distinctly unau- thorized activities. 3. is 2 Construction in the state from which an act will be followed. R.) all others. 130 Iowa N. is being assumed that just as a charter the limit of power. Bankers' Trust Co. Supp. so generally by specific grant. St. 64 N. § 21. 23 Pac. 351. It Organization Under General and Special has been held that a corporation may be 7 Steppacher v. such as cities. § 22. 69. Laws. 135.) 3 Legislative intent is sought. (1906).. it is but incidental to my it present purpose. State ex Hadley v. Kavanaugh Commonwealth Trust v.46 to TRUST COMPANY LAW [§21 governmental agencies. rel. v. (Expressio unius est cxclusio alterin so far as they are inciit its Powers may be implied . Principles of Construction of Trust Com- pany Charters. Am. (1898). it is construed against them. and hence. 758. 669. v. the usual test of validity being that a contract has been executed and the status quo cannot be restored. however. 4. in conis formance with the principle that ambiguity or doubt contra decided against the proponent (verba fortius accipiuntur proferentem. 2. They ask for their charters. Misc. State ex rel. Lincoln Trust Co. 138 S. App. Co. Y. 17 6. when the language or in- doubtful. (1890). App. counties and school districts. W. 737. 638.

Nichols (1905). page 286. 82 v. Wycoff v. McCarter v. while a bank might issue bills. 186 U. (1910). On (Neb. receive deposits and commercial paper and make loans thereon. will take a judicial notice that a 9 In fact. 62 Atl. discount bills. Epworth Hotel Const. Jenkins v." but it was conceded that it requires an express statute to empower a corporation 8 to act as all "guard- ian. 46 L. 11. notes or other commercial paper and buy and sell gold or silver bullion.§23] VARIED POWERS 47 organized "with power to act as trustee. is generally the case as to other state statutes. L. 230. Where this has been done. it is not permissible to organize under the general corporation laws for these special purposes. but in its banking feature it has more restricted rights than are accorded to a corporate bank or to an individual banker. Mo. & Real Estate Co. a trust company may receive deposits of money and other personal property. 42. Peterson (1906) See. also. Pac. 550. Powers. Imperial Trustee Co. 437. Trust Co. this latter point see Continental W. J.). but banking powers of trust companies in New York have been extended since this decision. 9. a court domestic incorporated such only as provided by the special 10 laws of the state governing trust companies. For example. foreign coins and bills of exchange. 741." Nearly states now provide special acts under which fiduciary companies may be incorporated. 11 This is the distinction found in New York law. 107 N. W. which I think 8. The trust company in America generally is trust is company organized under the banking laws of a state." under general statutes authorizing incorporation for "any lawful purpose. 554. 223. issue its obligations therefor and loan money on real or personal securities. (1905). 72 N. S. administrator or executor. State v. 786. . Trust Companies as Having Varied § 23. 1140. 40 Wash. App. Ed. Neff (1902). 146 10. 125 S. see Appendix. notes or other evidences of debt for circulation as money.

bonds. (6) To accept and execute all legal trusts confided to it by any court of record. it annexed and committee of unsound mind and being provided that no official It is also oath shall be required in the premises. bequest or other authority. pro- vided generally that no security shall be given by such trustee. all and debts due by the company in these regarded as trust fund debts and its to appointments are have preference over other debts. Some state laws provide for deposit with a state officer of securities as to these property. idiots. But the business necessities of our civilization have called them into existence for various other things not of a banking nature. receiver or trustee of the estate of any minor become the depositary of moneys paid into court for the benefit of any person or corporation. persons of assignment. adminis- habitual drunkards. (7) To will. The enumeration of these things is stocks. municipality body politic substance as follows: To act or corporation. unless a court so orders in a particular case. securities and other personal property. person or corporation whether by grant. (2) To receive deposits of trust moneys. of great particularity. as their agent.48 TRUST COMPANY LAW [§23 In New York a trust company also may buy and sell mortgages and bills of exchange. devise. (3) To act as trustee under any mortgage issued by any body and generally to accept and execute any municipal (4) To accept trusts of married women as to their separate property and manage same politic or corporate trust. in The New York statute provides as fiscal or (1) transfer agent of any state. (5) To accept judicial appointments as guardian. and to be appointed executor or trustee under a trator with or without will estates of lunatics. funds or this .

except the first. under New York law. to say. . With these. that grant. there is to be no tracing of trust funds in the hands of the trustee or of that in which it may be invested. eral principles of equity marks may be set to discretion. This question I will advert to in another part of this work. and that is so very much It is associated with the others in the usual statute. everything reasonably necessary to effectuate the purpose of the There may be a limitation on power in an instrument creating a trust which would apply in the same way as were the trustee an individual and in the same way. it would seem that a trust company is to be like an individual except that. however. where the company is appointed to a statutory office. Though the charter. that receive discussion hereinafter.§23] VARIED POWERS 49 seen from the above enumeration that none of the things pertain to banking and all of them arc of a trust nature. it Also under the genis bound as an individual is bound. is which go with their grant. public consideration may rightfully demand that they be (a) confined within powers properly exercisable by an organized impersonal entity. or statutory powers of trust companies must be wide enough to enable them to perform the many special services for which they are equipped. and possibly under the law where securities are given. (b) that they be kept from speculative enterprises apt to impair their responsibility (c) to and within powers that are conformable public supervision and regulation. It it will becomes apparent from reading the above enum- eration that a trust company entitled to exercise all all of the conferred powers needs of the implied powers.

and we will." may take over the business of a debtor to save the debt. 419. has "every implied power that any bank would have so far as not proIt hibited by the express terms of the Act governing trust companies. therefore. for discount. Union Savings & Trust Co. 681. the legal questions applicable to trust companies as banks are the banks. S. and selling such mortgage securities with the company's guaranty. 829. bullion or stocks for sale. 24 Law Ed. bills or notes belonging to him. and when a customer brings bonds. But when a corporation or natural person receives from another person. content ourselves with a brief consideration of what activities constitute "banking" by trust companies and what implications are raised with respect to their manner of exercising banking functo amplify these pages with discussion of purely tions. note on "Acts Constituting Doing 'Banking' Business" in 18 Am. he is acting as a banker. 249. and they are reA trust company authorized to do a general banking business lV/i. v.50 TRUST COMPANY LAW [§24 Trust Companies as Banks. 153 Pac. bills of exchange or promissory notes belonging to the other." It In this case the court said: "In no proper sense can receives his it be understood that one bills. Generally § 24. Krumm (1915). 20. He receives the bonds. also. Equitable Trust Co. See. where its "only business has been and is the investing of its own capital in mortgage securities on real estate. or or notes. 12 was held by the United States Supreme Court that a trust company was not doing a "banking" business. 94 U. as evidences of debt. own stocks and bonds. There is no occasion 11 ' 2 banking matters. to be banking business. Cas. 12. . Anno. for discount or for sale. in same as those pertaining to state and national For that reason they are sufficiently treated works devoted to banking law. & Eng. (1877). 88 Wash. Selden v. though he may Nobody would understand that sell them afterwards. within the meaning of the revenue laws.

v. (1884). 172. See. . demonstrate that mere fact that a corporation is authorized to exercise some of the functions of a bank does not. 361. not that received from others for sale. State v. in law and in fact. we think. to be sold. Wells Fargo & Co. was gone into at great length in a New York case. (1893). 15. Those bonds it sold with a guaranty. in our opinion. create it a bank. State (1913). Trust Company lent its own money. App. E. Northern Pacific Railway Co." In a Missouri case the 13 it was held that: "An exami- nation of the authorities will. 28 S. 13 Ga. 139 N. People v. is one who receives them he as an agent for a principal who buys and sells The Equitable who is the owner. the better rule appears to be that trust companies will be re- regarded as coming under banking regulations and su15 pervision for the maintenance of their solvency. 898. taking bonds and mortgages therefor. as denned by the revenue laws. See Section 138 of this book and cases there cited. Binghamton Trust Co." The court then cites a federal de- cision 14 wherein an express company having many bank- ing powers was held technically not to be a bank. Reid (1894). 43. 469.§24] BANKS 51 ceived for the purpose for which they are bought. Dunn v. did not constitute the corporation a banker. He is not one for his own account. 34 X. Such a business. with pass books and rules similar to a savings bank. that is. 185. E. But. also. In who receives goods for sale common understanding. however this may be with reference to particular acts and particular laws more or less restricted to banks. 16. 16 The court decided that this was a lawful 13. the case is presented which we think was con- templated by the statute. 79 S. The implied power of a trust company to operate a savings department. Y. 14. 125 Mo. 170. It sold its own property. Fed. W.

R. or attorney in fact. 66. 20. 23 7 L. (1900). because a corporation can only act through agents. A." Similarly the issuance of certificates of deposit 17 is but a detail incident to a trust company's general power to receive deposits. was merely "A reasonable and prudential agreement as the basis of its rela- tions with a depositor. Michel (1904). could not execute a deed of conveyance of real property as the attorney in fact for another.52 TRUST COMPANY LAW its [§25 exercise of detail in tion of the rules banking functions. 638." etc. Of this contention the court 17. Killingsworth v. Title & Trust Co. its purchase. Y. Bank of Saginaw v. v. (1890). 869. New York Life Insurance & Trust Co. Beebe (1852). page 286. 4. with addition of interest. 105 Fed. Trust Companies as Agents. for any public or private corporation or person in the management and control of real estate or other property. See New York Law . 18. and the power of attorney gave no authority for substitution. 113 La. 7 N. is 18 The busi- ness of agency a lawful purpose for corporations or- ganized under general laws. (3 Seld. sale or conveyance. State v.. 20 There it was argued that a trust company empowered by its articles of incorporation "to act as the general or special agent. a seemingly contrary decision was under a statute specifically prohibiting all corporations except banks from issuing evidences of debt upon loans. 18 Ore. The agency powers of trust companies have been ac- cepted. The formula- by which what would be an ordinary deposit was made subject to withdrawal on certain conditions.) 364. 351. 36 So. Pac. without question. Portland Trust Co. except the point raised in an Oregon case. Appendix. though certain kinds of 19 agency are frequently confined to corporations organized under acts solely applicable to fiduciary companies. 19. § 25. 491.

sometimes assumes obligations of a combined trusteeship and agency with 23 express provisions limiting § 26. see. Y. in Sec Chapter X of this book. . the person conferring the power knows that the corporation cannot act personally in the matter. Supp.§25] AGENTS 53 said: "When sell a corporation is invested with a power of and convey real property. Trust Companies as Guardians and ComTrust company laws usually provide spepowers. Central Trust Co. Y. affirmed without opinion in 1S9 N. without a delegation of authority to its agents. and that the grantor of the power has given no such power of substitution. mittees. 793. Y. 127. Gernsheim v. Y. 279. for reorganizations. Div. This 22 frequently consists or it of acting merely as a depositary. 501. trust companies act as transfer agents. who for that pur- its faculties. 117 X. 255. also. Supp." In addition to acting as attorneys in fact. 95 Fed. For construction of clauses (1S91). 22. it cifically for these has been held that the general power to execute trusts of 21. App. reorganization agreements for protection of committee. and Mawhinney v. under the power of attorney. cannot be sustained. etc.. In this view. 16 N. E. as instrumentalities authorized by him to do the act con- by his power of attorney. Van Sicklen v. the argument that the corporation cannot do such act. 21 fiscal agents and agents Its status as a reorganizing agent will depend upon the terms of the agreement under which it is appointed. 1169. 23. 102 N. Bartol (1899). but that in performing the enattorney to gagement pose are it will act through its agents. but in the absence thereof. Converse (1907). 81 N. and whose acts in the discharge of that duty are the acts of the corporation. its liability. See Sections 79-SO of this book. and as such must be considered ferred upon it to be included in the artificial person.

common law. 29 Mo. 40 Minn.: 54 TRUST COMPANY LAW [§26 any description include the power of guardianship and committee. relating to corporations. 70 . 190 Pa. W. St. Beebe (1889). where a corporation amended its "The nature of the business articles so as to provide: carried on and conducted shall be a general banking and trust business." it was authorized to act as guardian as the statutes referred to provided for this power. 42 Atl. 644. A. tucky Statute 1903. 7." Am. or conflicts with prior impolitic. Garis (1899). Rep. 159 S. The sum and is of his argument is that such a statute is derogation of the statutes. W. 1. Threlkeld's Guardian (1913). In 24 Brown v. as provided by chapter 32 of the Ken833. v. The follows constitutionality of laws providing for corpo- rate guardianship was passed upon in Minnesota 25 as "The contention of counsel seems islature has to be that the Leg- no right to grant to any corporation the power to act in any such fiduciary capacity. Glaser v. v. Equitable Trust Co. and combined banks and trust companies. 595. St. With our preconceived ideas on the subject. or such parts thereof as shall apply to corporations of that character. 41 25. it might seem somewhat inappropriate to intrust the person of a minor to the custody of a corporation. 1022. Minnesota Loan & Trust Co. some of which might have some weight if addressed to the Legislature. His argument deals in much criticism and denunciation of the statute. R. 418. 154 Ky. but perhaps experi- ence will prove that the objections to this are largely artificial and imaginary. N. 232. banks. 24. Priest (1888). But none of these considera- tions goes to the question of the validity of the act. App. 544. but he entirely fails to point out any provision of the constitution with which it conflicts. trust companies. 2 L.

§ 27. . since it is not obliged to file an oath or It bond. 437. guardianship of the person being a personal as guardian of relation. 499. 1. Y. 206. (1896). 1110. 111. Y. Div. 124 X. where a trust company was appointed because of dispute be- tween mother and 25£j. 46 N. but that the security is greater. Hanson (1916). The appointment of a trust company an infant's estate was upheld as a proper counter petitions. son. E. Y. 26. 166 336. p. 96 N. Y. 26 In appointing a trust company as receiver. has been held that this capacity cannot be questioned after the decree appoint- ing the corporation has been affirmed by the court of last resort. and see Matter of Wyckoff (1910). and otherwise there would be no formal evidence that had entered upon the discharge of its duties.. Misc. Matter of Buckler (1904). voritism will have less and the element of personal faThus it was remarked in play. tirely The power to act as receiver or assignee It is en- dependent upon statute. Title Guarantee & Trust Co. 72 So. and 2 exercise of the filed Surrogate's discretion in a case where two sisters it appeared that the estate was large and that there were family disputes and differences. the Supreme Court of Alabama held that trust companies In may if a act as guardians of the estate. e'25. S9 N. Supp. Roby v. 397. but not of the person minor.§26] GUARDIANS 55 Murphree v. Supp. Heaton on Surrogates' Courts. Trust Companies as Receivers and Assignit 25 * ees. 67 N. App. judges not only feel that they are obtaining the services of those specially trained and equipped for the work. ^ has been observed that good practice requires that a trust company file a duly acknowledged consent to act as a guardian. 25*/.

among other objects. Utah. 10 Howard's 28. When trust companies lawfully act as sureties they are governed by the same 27. on the care and vigilance. MisNew Jersey. as well as and those who rely. cific Trust Companies as Sureties. and the counsel of no man. souri. to the million dollars. has a right friend is to complain that he or his particular not appointed receiver. must yield No man. Montana. Empire City Rank (1855). receiver. The spe- power to act as sureties is provided in the trust company laws of some states." § 28. New Mexico. North Dakota. In the matter of the Practice (N.) . to be entrusted to his re- sponsibility. I can feel no hesitation in trust amount of one making a selection between the nominees. too. (This list is but illustrative and is not intended to be exhaustive. District of Columbia. are counted.: 56 TRUST COMPANY LAW 27 [§28 an early case. have been nominated to discharge the trust. and several personal obligation can highly respectable individuals. but by hundreds There are absent parties interested as are present who —minors. Private pref- erences. Y.) 498. well as those adults. in this as in to public considerations. that wherein a trust company was appointed States' "The United Trust Company. and have a right to rely. As no mere be equal to the mortgages and public stocks. not of thousands. 28 but generally this business as a corporate enterprise is confined to companies organized for this special purpose. Michigan. most other judicial acts. especially where the assets. Kansas. Colorado. for the express purpose of meeting such requirements. Indiana. by tens. pledged as security by the company. as in these bank cases. Pennsylvania. and unbiased judgment of the court. exclusively and without professional intervention. and as that institution has been created by law.

The power as exercised here was certainly not 'essential to the transaction of its ordinary affairs. See notes on Surety29. 20 book does not treat of §29. 142. & Eng. or to bind themselves by accommodation indorsements. R. The Kansas.§29] GUARANTORS 57 rules that apply to surety companies. obligations and securities. 186 U. 1093. 46 L. which will remove the transaction from being a mere "accommodation. a trust company may has been held that of a bond guarantor become the it Thus Stearns' "The Law of Suretyship" (1903). S. loan and trust business. Anno. .' and it must be assumed that the general ride is applicable that such companies have no implied power to lend their credit. A. or paper which they negotiate in due course of business and the proceeds of which they receive. ship in L. but the naked power to guarantee the paper of one third party to another is not incidental to the powers ordinarily exercised by them.' And so far as the question might be resolved by the usage in Kansas. Ward v. Joslin (1902). ed.) An interest. the were adverse to plaintiff." however. in Am. 30. but the declaration alleged that this company was organized 'for the purpose of transacting a general investment. of this subject but refers the reader to some of the many works on Trust Companies to Act as extent of a trust company's implied powers with respect to guaranty was thus summarized 30 by the United States Supreme Court: "The purview of the words loan and trust' does not appear to have been defined by statute or decision in Power Guarantors. 303. They may guarantee paper owned by them. this For that reason suretyships." (Italics supplied. need not confindings sist in absolute ownership. buying and selling commercial paper. Cases and in 32 Cyc.' nor within 'the legitimate objects of its creation.

In re License Victuallers' Mut. 1. anty. 684. by is a species of guar- which the underwriter agrees that "in the event of the public not taking up the whole of them. W. derwriting as applied to securities. App. (1909). McCauley v. 60 L. 86. N. S. or the number mentioned in the agreement. it would not be authorized to simply engage in the business of becoming a purely accommodation maker or endorser of promissory notes. E. 42 Ch. The result of such hazardous and reckless dealings and acts by the officers of trust companies is well illustrated in this case. 476. and in our (the Court's) judgment it was wholly without authority. Trading Ass'n. R. for an agreed commission. Commonwealth Trust Co. Gause v. First National Bank 109. 327. 196 N. L. 79. 58 Ch." that it created "a hazard so great as to involve the very life of the defendant. 32. as it appears that the defendant was organized with a large capital and paid in surplus in the spring 31. L. A. Rep. . notes. J." 3 The participation of a trust company in an undertrust. J. 34. 79 494.58 TRUST COMPANY LAW it is [§30 of which trustee 32 31 and a trust interested in financing a railroad to endorse its company which was had the implied power : "It may be though the court said conceded that. 86 S. 81 N. 33. v. 89 N." Trust Companies as Underwriters. Atl. 467. 34 writing has been condemned as ultra vires. Ridgewood Trust Co. Div. 134. in a case growing out of the collapse of the ship building The New York Court of Appeals characterized the trust company's act as "a reckless and most unusual and hazardous agreement. Y. 187 Mo. Guardian Trust Co. D. Y. the underwriter will. take an allotment of such part of the shares as the public has not applied for. (1905). 438. under the powers conferred upon the defendant by the statutes under which it was organized. 70 L. Un§30. T. (1011). affirming 124 N.

and within a few months thereafter was shorn of its surplus and compelled to reduce its stock to a small part of the original issue. for its right to purchase outright must surely include the lesser power to purchase contingently. it has still If such business upon its hands methods are authorized by statute and approved by the courts the purpose of the organization of trust companies would fail and result in a trap to those invited by the legislature to submit to such corporations their fiduciary accounts. power. from where a trust company limits its participation in an underwriting to an amount and quality of security which it could lawfully purchase in its own It would then be exercising less than its full behalf." This situation is quite different." As pointed out by the Court "The defendant (trust company) did not at any time become the owner of the bonds and stocks but the guarantor of a 'future' and in substance of the prosperity and success of the shipbuilding company. and this serious litigation.§30] UNDERWRITERS 59 of 1902. . it appears to me.

1.CHAPTER VII Trust Companies as Trustees Trust Companies Generally Like Individual Trustees. 520. E. Indiana Trust Co. Y. 176 Ind. . as to trust funds in their 1 hands in a fiduciary capacity are like individual trustees. Div. 573. (N. Anno. : herein authorized as guardian. executor. A. Griffith (1911). R. affirmed on opinion below in 179 N. Sec 290. It is said in the Colorado statute regarding trust com2 panies "In the exercise by said company of the powers § 31. The exercise of other powers and the performance of other duties may be as to compensation and otherwise matters of contract with the parties interested. 44 L. Colo. administrator. S. 1133. holding trust company as guardian to same rules of investment as an individual guardian. Y. v. Trust companies in their general rights. also. 65. (1904). Stats. 2. 1912. Supp. Y. 71 N. E. holding that a trust company acts against public policy in transferring its own securities to a trust fund. said company shall be subject same and shall have the same powers receive the same compensation as fixed by law responsibilities.) 873. except as hereinafter specially provided. App. See. 92 N. shall offices with relation to individuals holding similar or trusts." 1. 95 N. committee or conservator of lunatics. duties and liabilities. 87 N. 643. Matter of Long Island Loan and Trust Co. or of any to the office or duty imposed by any court. and must make the fund good with six per cent interest.

or loses or acquires trustee. Stark v. 53 Atl. 26 Atl. E. McEachern v. Eq. 1112. 2236. Mclntire v. Davis v. First Trust & Savings Bank (1912). W. Bailey (1907). 548. 122 Ind. administrator. 128 Pac. St. statutes have introduced. Hill v. 85 Me. 43 N. Specific Provisions as to Integrity of Trust codes and rulings in many cases in regard to mingling of trust prop4 erty by a trustee with his own. 34. 596. however. 73. Cal. assignee or trustee "under the same circumstances. . 194. 465. Vt. 66 Vt. are not supposed to affect the integrity and general management of trust funds and are more directory than otherwise. 411. Sec. 511. 133 la." 3 Such provisions as these are inserted. 4H9. . 203 Pa. 19 S. In re Hodge's Estate (1S93). § 32. C. Bangor v. Bobb (1886). 820. 4 S. H. guardian. so to speak. v. Stewart (1894). Yellowstone County v. for the fact that these companies merely are authorized by statute to serve like individual trustees carries the inference that they would be bound generally in the same way and have trustees. 46 Mont. 70. such a practice being Funds. 89 Mo. Whitthome (1865). E Erie School Dist. There are provisions in many 3. (Tenn. 548. 23 N. In the handling of the corpus or funds of a trust. 2S Atl. 44 Am.) 242. Beal (1892). Pub. 758. Hill (1911). some cies changes applicable only to trust companies. 418. W. the same rights and duties as individual A trust. an office in the nature of a trust. Clay (1861). 2 Coldw. as a natural person.1 §32 TRUST FUNDS 61 In Vermont it is specifically provided that a trust company may act as executor. Griffith (1902). in the same manner and subject to the same control by the court having jurisdiction. 62 Code 1906. Bobh v. Mason v. 82. These differences. J. 60 Ky. Va. Gamble (1862). removed or discharged according to exigen- expressed in the trust or its termination. 110 N. nothing according to the quality of the merely the executive of a trust and is He or it is continued. 114 N. 79 N. 123. Lawder (1889). by specific enactment. Harmon (1S71). 129. ex industria. 603. however. Sec. 338. 4. 521. Laws 1910. 370. Rep.Atl. 5S8 Clay v. Line v.

Stats. 411. and all investments made by said company as fiduciary shall be so designated that the trust to which such investments belong shall be clearly shown. and in Wisconsin. Code. 24. 12. Ch. Sec. Laws of 1907. and something in the way of a penalty being sometimes imposed. 14. Ch. As for example it is said 12 by Louisiana law that: "None of the funds or the property held by such a bank as agent or trustee shall be counted among the assets or liabilities of such bank in making the statements required by law to be published 7 Maine 13 it is provided that: "All the property or money held in trust by such company shall constitute a special deposit. in Pennsylvania. Ch. p. Iowa Pub. 158. and such funds and the investment or loans of and 9. 1904. Ch. 152. 1910. 77. Sec." And in accounts thereof of said trust department shall be kept separate. Sec. 11.62 TRUST COMPANY LAW [§32 generally condemned. 10. shall be specially appropriated to the security Colo. them 5. Sec. Laws La. W. 13. Me. 94. in Vermont. 8. The found principle of the non-mingling of trust funds is specifically declared in many of the statutes au- thorizing the incorporation of trust companies. . 31 There are provisions in the trust company statutes of other states which strongly imply that there shall be no mingling of trust funds with the general assets of a company. 25. 7. 3. Sec. Acts. p. 1913. 1910. 5 For example the Colorado statute provides that: ''The said company shall keep all trust funds and investments separate and apart from the assets of the company. 96. 6. in West Virginia. 8. Mass. Va. Sec. Anno. 1911. Stat. p. Sec.. Laws. Laws. Pub. 2024. Sess. 1912.. Ch. Purdais Stats." There is a similar provision in the Iowa Trust Company law. in Massachu10 9 8 setts. Sec. Rev. 4832. Sec. and the of the affairs of such bank. 3179. 96. 400. 77-M. 1913.

86 N. in the case cited. This. could be easily remedied. "as trustee.§33} PARTICIPATING MORTGAGES 63 payment of such deposits and not be subject to any other liabilities of the company. zine. by adding the description. because he believed that disapproval would be contrary to the decisions by higher courts in New York and elsewhere. nor that it could be settled right. 16. Mortgages. 392. of course." He believed that such investments violate the law against the mingling of trust Another objection in the instant case was that the mortgage was taken in the trust company's name funds. 3:24. 1914. But he did not consider that the question settled "until it is was settled. 1 Supp. pp." Removal of doubt as to the legality of this form of investment has been effected by statute in at least one 10 Similar legislation in other states has been state." July. "Trust Companies Magazine" for July. individually. 149 X. 15. "Whenever any such allotment is made trust company makes fair and precise records and tries in its books. Wisadvocated in "Trust Companies Magazine" * transfer may companies trust consin has provided that to trust estates without incurring other legal liability 14.mortgage is a mortgage taken by a trust company in its own name." Integrity of Trust Funds Participating § 33. pp. A participating." ment. Y. Misc. (1914). 1914. 7-12. Matter of Union Trust Co. 7-12. \ See review of unreported cases in "Trust Companies MagaCalifornia. . clearly demonstrating as to each mortgage the parts thereof which have been distributed to the various trusts concerned. as trustee and — from time to time allotted in undivided portions to varithe en- ous trusts. and it faithfully conveys notice to 14 the beneficiaries of the disposition of the The Surrogate upheld this kind of an investfund.

Y. consisted solely in depositing for collection the checks received for rent in one or more banks in which the trustee kept an ordinary deposit account in its own it corporate name. 148 N. 882. 85. The Own — mingling of trust funds with the general funds on deposit with a trust company have presented new questions as to what rate of interest is chargeable against the trustee. 531. Y. but approve as to above point in 210 N. an account subject to check. modified in other respects. (1911). and not with the legal rate of 6 per cent. Supp. 237 Pa. Y. Reid v. 18. 1114. 186 Laws Reid (1912). where it deposited trust income in its ordinary bank accounts in other institutions and kept no separate acBut the Court said: "This count of the earnings. that is. 234." The New York courts have decided 18 that a trust company was chargeable with interest at the regular trust company rate of 3 per cent. it was held that where a trust company did not keep the money arising from the trust fund in its trust department. Deposit of Trust Funds in Company's Banking Department or With Company's Own Deposits in Other Banks Interest Rates. 85 Atl. 176. and by checks on which accounts made payments l&]/ 2 17. "but commingled the funds with the general deposits in the said institution. mingling of the trust income with the trustee's own money. Herzog v. Title Guarantee & Trust Co. p. Apr Div.64 TRUST COMPANY LAW if [§34 than as such transfer were 16% mortgages or securities § 34. In a Pennsylvania case. Ch. . 132 N. * * * it should third party 17 pay the same interest thereon that it would pay to a who carried with it a deposit of a like character. of the said trust income as well as payof 1909. . in the form of a general checking account. St. made to a third person any owned by it which are legal in- vestments for trust funds.

People v. In other words. (1913). is clear that the judgment appealed from. 22 Cal. It. . California Safe Deposit 133 Pac. cannot be sustained upon the theory that the trustee had made use of the trust funds. that the trustee allowed the estate the regular rate of interest. showed a large balance of the title continually accounts (trust) company and what is more important still. therefore. The Court said deposited in the savings department is only significant as indicating that the trust company might use the : money and pay the usual interest thereon. had failed to separate the profits therefrom from its ordinary profits and. There a will provided for a fund to be deposited in a trust company for certain minors and to be paid over to company them "with the accumulated interest on arriving at the age of majority." the deposit to be made in its savings "The direction that it be department. its use by does not take away from it the security afforded by special deposit required to be made. therefore. it is its receipts as trustee in its ordinary affirmatively established that that balance at all times exceeded the balance of the trust funds belonging to the McComb estate and that at no time was any draft made upon the account which required the use of any part of those funds to meet it. depositing bank But it affirmatively appears that such bank accounts. & Trust Co." A District Court of very interesting case decided by a California 10 Appeal shows that where a fund is deposited with a trust the latter in its business as a fiduciary. 69. act. 324. But * this is allowed by the very terms of the 19.§34] DEPOSIT OF TRUST FUNDS 65 ments for its general purposes. should be charged with the full legal rate of interest. the claimed use of the funds consisted solely in this. * * The pay- App.

or to show that such deposit did not contribute in any degree to its profits as a banking institution. In re People's Trust Co. 155 N. St. imposed by statute upon such an institution. unjust. it is unreasonable. Y. Div. general rule of individual trustees mingling trust funds with their own property is concerned and deduced the is specific conclusion. 1." The deposit of trust funds by a trust company in its own banking department was recent decision in forcibly approved in a New York. 20. 88 N."' Trust Company Statutes Respecting In§ 35. I have adduced as authority cases so far as to the as an executor. 19 '72 Here the Court said: "When we consider the nature of a trust company. the money received by it as a fiduciary.66 TRUST COMPANY LAW interest directly [§35 ment of of the the by the corporation for the use money does not militate against the theory that money was held in a trust capacity under the act. Supp. N. v. Paul Trust Co. W. vestments Variant From Individual Trustee Rules. the statutory authorization to act as a bank of deposit and and the legal obligations protective of the fund. that. 256. and discordant with the statute law to require it to deposit in another banking institution. 19^. 85 Minn. . upon the assets of which it has no more security than any other creditor. Strong (1901). trust companies are bound in the same way. unless there provision to the contrary. Y. (1915). 639. * * * The trust company was thus appointed trustee to take and hold this money until the beneficiary should reach majority. et al. A Minnesota case 20 is quite instructive on this point. It seems to be just such a trust as the act intended should be protected by the securities required to be deposited with the state treas- urer. App.

and may transfer its own proper securities to any trust estate in other words. nor purchase on account of another that which he sells on his own account." After pointing out "the hazards which might surround and endanger trust funds" should this rule be not observed. quality. "There was no intention to set aside well it was said: The rule to : 21. and genuineness of notes and mortgages made. quality. supra. But see Matter of Long Island Loan & Tru>t Co.§35] INVESTMENTS 67 The shall court after quoting from the trust company statute that: "The directors of any such corporation have discretionary power to invest all moneys received hy it on deposit or in trust. and. it is argued that self-interest on the part of the trust company has been wholly removed.. . regularity. in any such personal securities as are not hereinafter expressly prohibited." 21 "A which the Court referred was that trustee cannot legally purchase on his own account that which his duty or trust requires him to sell on aco runt of another. that nothing impedes the proper discharge of its duties with trust funds . that because it is responsible under the statute for the validity.) curities thereof. He is not allowed to unite the two opposite characters of buyer and seller. taking them together." said: "These are among the safeguards thrown about the business by the legislature. it has been excepted from the general rule. under § 31. and que it shall be held responsible to the owner or 'cestui such moneys for the validity. value at the time the investments are — deal with itself. regularity. value and genuineness of all such investments and securities at the time the said investments are so trust' of made and for the safe-keeping of the evidences and se(Italics supplied.

Indiana Trust Co. 101 N. State v. quality. a sound discretion be24 ing required to be exercised. but he is not an insurer. 44 Mo. E. In re Roach (1907). C. 23. is merely valuable 22 for its reasoning. strictions it was the object and purpose to insure a rigid observance of such rules by statutory retion in and regulations. 573. 179. 118. 65 L. 23 The rule. Burns. Gen. I think. 17. v. 50 Or. Ch. 95 N. 471. however. Griffith (1911). 4953. 25 reviewing a great fund is invested. Eure (1888). 25." But this statute as thus construed was shown merely to have its limitations in application and not as taking away "the discretionary power" expressly vested in the directors. that he must act in good faith and that is all he is bound to. Stats. however. (N. In re Chapman (1896). 892. J. . Rep. 100 Am. quality. Sec. 356. regularity. A similar provision is found in the Statutes of Indiana. makes them guarantee "validity. value and genuineness" of the securities in which a trust an individual trustee is. 92 Pac. S. Moore v. S. 763. as to 22.68 TRUST COMPANY LAW [§35 settled rules for the conduct of private trustees.) 873. 298. upon the other hand. 9 Am. 11. 7. This decision. The design of this legislawas to promote and insure strict business principles the management of these companies. but. 24. 196. 2 Ch. 1908. Sec. 7 S." same responsibility as to their validity. because there being the now the Minnesota statute confines investment of trust funds "in authorized securities. 75 L. Thus it was ruled in a Missouri case. 1913. 176 Ind. This statute. A. Meagher (1869). Dec. value and genuineness as before. 643. E. even in its amended form seems to place on trust companies a more stringent It liability than exists against an individual trustee. N. regularity. along with the exercise of the same care as in managing his own property. St. 6412. and thus to pro- tect the people. 44 L. R.

193. Lamar v. 751. others he know he has been exonerated. 2S L. ate notes held upon the ground that such an invest- and bonds "had no legal value as money or * * * property" they could "never be regarded securities in which trust funds might be lawfully as in- Cobb v. 112 U. would have a tendency to deter men of prudence and care from assuming such relations and responsibilithus leaving these funds to fall into the hands of ties less careful and scrupulous persons and to a consequently increased hazard. C. Baldy v. 657. . Micou. Horn v. I I can find no case directly in point. Hunter (1898). exonerated from accountability. 200. Ed. S. that: "Besides. and agreeing with them. 171 U. he would be exonerated. 27. while in was ment contributed to the financial resources of the Con27 But federate government and was in aid of its cause. that. Lockhart (1873). E. 43 L. Micou (1S84). 28. 452. 64 N. 280. 2 L. reinvestment forbid not to a held principle was even this of Confederate currency by the purchase of Confederate 27 28 In Lamar v. Va. Ed. against which the watchfulness of a prudent man could not guard. in equity.§35] INVESTMENTS 69 number of cases regarding in the the robbery of trust funds hands of an executor. S.' the Court said Confederbonds. the holding of trustees to responsibility for trust funds in a plain case of theft or robbery." It is hard to imagine reasoning of — this kind were a statutory trust company seeking eximagine. but oneration. Taylor (1869). 208. 388. Ed. 17 Wall 570. Catlett (1887). 2 S. and of his being. in some 20 cases for investment in Confederate bonds. if in an individual trustee were to invest trust funds bonds that were forgeries and he took all reasonable I precautions to ascertain their genuineness. S3 26. Waller v.

Mass. or any state of the United States that has not defaulted on its principal or interest within ten years or of any organized county or within the State of : township or incorporated city or trict in this state. however honestly deceived it were. or in pursuance of any order of the court relative thereto. S. 1913. 22. R. p. 12142. Sec. 36. any other such duly author- Mass.70 TRUST COMPANY LAW I [§35 vested. he shall make 29 the investment ac- cording to his best judgment. 1902. Stats. 1115. R. village. not because the bonds were of a spurious government. or school disstate. Sec. counties. I greatly doubt whether an individual trustee always would be held. The courts in the cases refusing to liable exonerate the trustee held as they did. 1902. it 1 may invest trust funds "in bonds secured by mortgages. Sec. Stat. p. a guardian sells property "in order to place on interest or invest the proceeds. or notes and mortgages on unincumbered real estate Michigan * * * or in public stocks and bonds of the United States. In Massachusetts there seems to be a difference in the rule as to investment by an individual trustee that by a trust if and company in a fiduciary capacity. cities or towns." But if a trust com''in pany is such guardian it may make investments authorized loans of the United States or any of New England states. 30. S. Howell's Annos. Thus. 31. but of a govern- ment in rebellion to the United States government. or in 29. Stats." in have no doubt that a trust company investing any kind of spurious bond or security would be held for real validity. ." 30 And in Michigan the trustee of an estate appointed by the probate court to invest or distribute it must do so as ordered by the court/ But if a trust company is appointed. 1319.

34. or in capital is the stocks or bonds of this state. Another section of of the capital this act authorizes investment its by a trust company of fiduciary funds in the discretion company in the securities of the kind in which is required to be invested. the capital stock. or in such real or personal securities. V. guardian. required to be invested "in bonds and mortgages on unincumbered real property in this state not exceeding sixty per centum of the value thereof. ?. it would be difficult to arrive at the conclusion that a trust company acting. Ch. 6486. or such as are permitted in and by the 33 instrument or words creating or defining the trust. property.§35] INVESTMENTS 71 ized to be issued. Ibid.in a fiduciary capacity would be exonerated for its mistake in investing in invalid securities. 193. 10. The statute says: "All investments of money * * * in either of such (fiduciary) characters shall be at its sole risk and for all losses of such money. or in the stocks or of any state of the United State. a Therefore there is wide latitude in the invest Sec." given to a trust company 32. or of any county or incorporated city of this state duly authorized by law to be issued. Consol. or in such real bonds 34 Its or personal securities as it may deem proper. 100.:. and unless the investments are such as the courts recognize as proper when made by an individual acting as trustee. Anno." they (the directors) may deem trust proper." 82 Under a New York company act. The statute then goes on to give to fiduciary obligations a preference over other debts in event of dissolution of the trust company. Sec. X. receiver. Sec. Laws L909. executor.. [bid. committee. administrator. effects of the corporation shall or depositary. . be absolutely liable. or of the United States.

Sec. 28. Here it is perceived there is a wide discretion given to individual trustees. p. . a difference in what one may invest in and what the other may not tions of the invest in. A New York Court of Appeals opinion (Villard et al.72 TRUST COMPANY LAW [§35 ment of of it fiduciary funds. town. 146. (2) obligations of New York. (6) bonds and mortgages on unincumbered real property up to 60 per cent if improved and 40 per cent if unimproved. As to investments by an individual trustee. county. 4187. New York statute provides that he "may invest * * * in the same kind of securities as those in which Savings Banks of this state are by law authorized to invest the money deposited therein and the income derived therefrom and in bonds and mortgages on unincumbered real property in this state worth fifty per centum more than 35 the amount loaned thereon." Investments by Savings Banks of funds deposited with them include ( 1 ) obligaUnited States. p. Villard. Ibid. There is. 1916). however. 36. holds a trust company continuing unauthorized investments and speaks of such a company's special 35. school district of New York. v. 407. but their investment has back all a preference over other obligations of the trust company. (5) stock or bonds of any incorporated city in any other state admitted into the union prior to 1896 under certain conditions. village. liable as a successor trustee for Dec. (7) mortgage bonds of certain rail30 road companies. (4) stocks or bonds of any city. Indeed it would appear to be somewhat wider than to trust companies acting as trustees. Ibid. (3) obligations of any other state not having defaulted in ten years.

When it is considered that the general solvency of trust companies in their banking and other business is aided in strict regulation by state officers. who is a trustee is personally liable to his regard to the trust property. however. and it is seen that every trust company must maintain as a deposit with the proper officer of the state a fund in * specified securities and: "The fund so deposited * * shall be primarily liable for the obligations of such com- pany as guardian. administrator. and apart from it the trustee stands as an ordinary debtor. Herein. if he can trace it. receiver. an individual. one would have to imagine a most disastrous cataclysm in their affairs that would take away the security from their first preference debts. the trust fund creditor peculiarly favored. consists the prime reason for the preference of a trust company as a fiduciary over that of an individual. I think. cestui que trust for any loss or default in but this rule has many limitations. in others of its type Thus he is in the New York statute and given a gen- eral preference over all other of the creditors of a trust company. either in its original or converted form. curator. It is true he may follow trust property. it being of the same character as others. but there is no lien or preference given for its payment or security out of the general property of the trustee.a 73 knowledge of investments reason for the execu- tors of the estate not owing a special duty to inform it of the investments made by them as distinguished from those made by the testator. In all trust is company statutes. Then take a trust company under such a law as in Missouri. According to the general rule. executor. trustee by appointment of court or . Liability of a Trust Company for Trust Funds. §36.§36J TRUST FUNDS being. assignee.

v. The R. and (3) unsecured creditors. or other fiduciary capacity under appointment of any court. in reasoning." This fund seen not to be solely. 38. There trust were three classes of creditors ( 1 ) depositors in the sav- ings department. but "primarily" liable for such obligations. [§36 guarantor or surety in or upon any bond required to be given under the laws of this state. 107. 177. court.74 TRUST COMPANY LAW will. as well. said: "All corporations which engage in the banking business have a paid up capital. 75 N. 377. 1909. (2) holders of debenture bonds. E. 46 S. under money tracts or guarantees fidelity is of every kind or 37 description. and in addition there is the trust fund creditor against the trust same right of a company and its is other assets as a cestui que trust has generally against the estate of an individual trustee. that to say. (1908). It was ruled that the first two classes were entitled to share with the unsecured creditors in the distribution of the unpledged assets. as to so much of their claims as were not satisfied by the application of the special funds created for their benefit. * * * According to the view of the general creditors. 364. Goff Goff (1903). 54 W. 39. H. he is shares pro rata with others. all bonds. Va. Bank Commrs. condepositary of in court. 71 Atl. Sec. S. Mo. treated in a 38 This question 39 well New Hampshire case where a pany's assets were being distributed in cominsolvency. whereby the is of persons holding places of public or private trust insured or guaranteed. and. One purpose of this capital is to create a fund available to pay the claims of all those who have dealings with such companies. v. Security Trust Co. . 1140. their claims must be paid in full out of this fund before any of it is available to pay the claims of depositors in the savings department of such an 37.

and in such case it would be difficult to say that a trustee going on such a bond. in the same sible not to see that this way and to the I same extent it is as the company's other creditors. a trust fund clear to admit of dispute. and generally speaking the trust company trustee does not give a bond. the legislature must have in- tended that the depositors in the savings department of a trust company should share in the distribution of the general assets. It is true that statutes like that back of the individual trustee is his bond. neither carrying any lien for its security. it Consequently. debatable whether the New York law." said the court. It is to be observed that Missouri law creates the same primary demand on bonds that a trust company signs as surety. ought not to be deemed as safe as a primary demand upon a corporation's general assets under regulation of law or a primary demand upon a special fund maintained by law." think impos- reasoning applies to funds in the fiduciary department of a trust It is company. In a conventional trust where no bond is required for a trustee qualifying. since 'natural justice' requires that those who help create a fund and those for whose benefit its is created should share in distribution. the rule of safety would seem too But even in case of a bond would seem that a personal debt with a merely personal obligation back of it. profits of the general banking business. or where an executor is named. or those in the of its type generally. it . "the profits of the savings department of such an institution go into and become a part of the general assets just as much as the institution.§36] TRUST FUNDS 75 "But. would assure more certainty full payment of fiduciary obligations than do of Missouri.

44. 124 S. trustee to charge the cost of such a bond to the estate this might be deemed an unnecessary expense. 26 L. R. will. 121 Reichert v. 7. Gibson (1901). State v. R. 218. Conn. 1. 43. 3 N. 238. 192. Cas. St. E. 12 S. A. W. common law if there were several trustees they were deemed to hold as joint tenants and upon the death 45 When the surof one the title passed to his survivor. v. 670. W. 40. 822. 207. Morrison (1902). 26 S. 419. looked so strictly to the trustee as the owner. A is not bound to pursue this remedy. 224 Mo. 45 S. 104 U. 54.76 TRUST COMPANY LAW [§37 would be any less safe than were the company itself the It might be that where statutes permit the trustee. Mattison (1909). 2<54. (1885). Riehl v. Mattison v. 44 This trust fund doctrine. (1881). 205. 17 Ida. W. 831. 149. 693. 1112. 34 N. 104 Ind. 45. Evansville Foundry Ass'n. . v. 61 Neb. : Rep. 102 Pac. R. St. St. Hopkins v. 42 The cestui appli- cation of this principle extends over beyond the trustee's death so as to make his estate liable. Mathewson Pundmann Burr (1898). there arises against the cestuis the rule do and of estoppel where to 43 an election he exercises his option. 474. St. 93. 34 Am. Oxdey Stove Co. ceeds. Life Ins. 367. Wakelee (1910). 75 Atl. Gilman (1893). Rep. 840. 121 Mo. It is familiar law. G. 463. 614. 144 Mo. Following of Trust Property and Its Pro§ 37. Central Nat'l Bank v. E. 633. Co. 83 N. 24 Colo. v. 64 Neb. Stephens 89 Ky. 42. . 905. Rep. 18 Anno. E. Rep. 829. 53 Oreg. Carter v. Stephens' Wilkinson (1899). whenever all its be subjected to the trust. 85 N. Holmes v. W. 369. A. 75. that trust property. (1907). *M (1909). 566. 20 L. 90 N. Marquette v. 70. 138 N. St. W. 83 Conn. Bruce (1909). 134 Am.. 45. Butter County (1894). how- ever changed in form identified. Missouri. but he has so or enforce against a trustee a personal liability. v. 100 Pac. Am. W. 125. 502. 115. W. Schoeneich (1898). ed. etc. McKee Downing Adm'r (1889). Lincoln v. 119 Mich. 41. 307 F. 4. 65 Am. 468. 78 N. 43 L. 'i' 245. Rep. the benefit of trust may have can be traced and cestuis que accretions in the hands it 40 and the 41 of any person with notice of character. Coal Co. where the trustee that at is an individual. 231 111. Y. 52 L. 238. 166. 133 Am. S. v. 52 Pac. A.

C. 9 Atl. . 53 N. Vanderveer Canarsie Improvement Syndicate (1914). you may do the same thing when such property gets out of 4G. Tonges v. A. Gulick v. Hicks (1906). and scmble where there was no joint tenancy. 148 N. Y. Colbert (1906). whether. of the right to follow a trust fund or property. 403. Bruere (1887). 748. 200 U. apply to property received from a trustee by a statutory trust company just as to any What I wish to ascertain is other recipient thereof. have no on the principle liable. of course. 7 L. 72S. A. the trust if was of real estate. or as giv- ing an election to hold a former trustee's estate except that they may give to his successor a right of ac- tion in the interest of the cestnis que trust. 4. J. Woodruff v. The inquiry proposed here does not concern trust property coming into the hands of a trust trustee. (N. 380. effect These statutes. 49.§38] TRUST FUNDS 77 vivor died. Woodruff (1888). 47. Speer v. Eq. J.) 407. 639. though you may follow trust property after it gets out of the hands of an individual as trustee. 141 N. E. The rule I have been discussing appears to apply as well to the holder of trust property who gives bond for the faithful performance of his duties as to one who fails to give such 49 bond and to conventional and statutory trustees. 40 and to his 47 personal representative the trust was of personality. have abolished this rule. however. Statutes. 16 Atl. S. 349. 50 L. and where a 48 trustee dies a new trustee is appointed by the court. R. 130. of course. Cameron v. 1 L. Right to Follow Trust Funds Turned Over § 38. Supp. 42 N. S. R. 21. company in The general rule as to any other way than as the tracing and identify- ing of property as trust property in a third person's hands would. ed. 719. 48. by a Statutory Trust Company. Eq. 44 N. the title passed by operation of law to his heir at if common law.

the question becomes somewhat narrower. or securities are deposited for the benefit of its fiduciary liabilities. would he waive his right as a preference not pass good title to such a taker 7 . money having no ear marks whereby it can be followed and the trustee being bound to reasonable diligence to make the fund produce an income. But when a trust consists of securities negotiable by indorsement. are concerned. These securities. then. pass from hand to hand. money and the like. Do such provisions by implication indicate an exclusive remedy as to trust property? might be argued that so far as mere funds. the scheme in organization of trust companies contemplates that they are to use these in the course of their business and nothing more than a preference liability arises under general law. except that one having actual notice of limitations in the power of the trustee would take them subject to such It notice. could he do the same thing where a trust company transfers them? And if he elected to follow the securities. Admitting. TRUST COMPANY LAW the [§38 the hands of a statutory trust as a trustee. but yet directed to be kept intact and not sold for reinvestment. that the individual trustee could and the cestui could follow them. as the New York statute prescribes.78 . especially as this would be the result in the case of an individual trustee. company holding be same One argument to that may made against the right under which a trust company holds as trustee gives to the cestuis que trust or the beneficiary of the fund either a preference do this lies in the fact that the statute right over its other creditors. like money. as the state of primary Mis- souri and some other states require.

. where a statutory company is trustee and there being such statutory provisions for his benefit as I have indicated? These inquiries or suggestions are considered important in view of the mingling of banking business. or the deposit of securities as by other law. the trustee meantime and upon the performance of certain conditions having the right to sell for reinvestment.§38] TRUST FUNDS 79 creditor or to be reimbursed wholly or upon a pro rata liable for fidu- payment. Super Ct. speaks of a deposit Fund & Trust made with a Graff v. in the absence of express statutory exclusion. 46 Pa. I realize that there ought to be. as to the assets of which 50 there are preferences given in favor of trust creditors. with remainder to go to others as a legal estate. and. as under Missouri statute) and the long time trusts often created. a very strong implication to prevent the applicaa tion of long settled equitable principles. emphasize the policy of the law as to trust property. fidelity bond business (this last also being a preference claim out of deposited securities. Could he. merely because there is new kind of trustee. A Pennsylvania case 50. while at the same time they appear not to regard its nature beyond the limit of such provisions. sometimes might prove insufficient to meet trust obligations in full. out of the securities primarily ciary obligations ? Take ing title to again. for example. 423. City Savings Co. the case of a trustee hav- property the income from which is to be ap- plied for a certain time and then the trust to cease. The preferences as by New York law. These provisions. If in the an individual trustee violated his trust the cestuis could follow the property into the hands of a purchaser with notice. (1011). however. however. do the same. in some states. transfer agency business.

80 trust - TRUST COMPANY LAW [§38 company to save it harmless as surety of the deThe trust company mingled this with its general funds in its deposits with a bank. he waives his suit for the fund itself and vice versa. where a trustee or fiduciary other than the trust company. If a cestui que trust sues for the conversion of the fund. and it was positor. which was also the surety of the fiduciary. It was held the depositor was merely a general creditor." ex Ct. namely. Union Surety & Guaranty Co. rel. (1908). but would he not become bound from the very inception of the appointment of the trustee to abide by the preference the law gives to the nature of his demand? The inference is not conclusive. Ct. 3 Pa. If a special fund were not set apart. Had the Pennsylvania statute been framed as is the Missouri statute there would have been another question. 179. that is to say. that added to its general responsibility and its special responsibility. or a preference claim were given out of the general property of a trustee. 244. made a deposit with the trust company. principle is The whether a creditor of a trust company in its purely fiduciary capacity may follow trust funds into other hands. v. because he was 51 And this rule was also unable to identify the fund. there is super-added the 51. (1897). the cestui que trust would not have any election of remedies. Super. had the special fund been as well for the protection of those for whom the trust company was surety as for deposits with it 52 in a fiduciary capacity. mingled with its general funds. Com. Super 52. held to apply. 37 Pa. . but it appears to me that it ought to have some weight on the question pany. In none of these cases was the point presented of following trust funds out of the hands of a trust com- one in election of remedy. Estate Solicitors' Loan & Trust Co.

App. 24. Miners' & Atl. 43 Atl. rarely. 129 N. Mosler Safe Co. 647. 93 5G. SS Atl. 444. 791. Co. 456. 441. 108 Am. Guardian Trust Co. v. 207 Mass. 208 N. 501. Taunton Safe Deposit Co. 80 N. Pratt (1909). 102 53. 707. 223 Pa. especially if by so doing there would be involved any question of election. 5:M. A. Div. E. Y. 566. 1035. (1913). 68 L. Snyder (1904). 62. E. 100 Md. (1909). 89 N. At is all events. 633. Loan & Trust Co. 63 Atl. Gause v. 59 A. Libby (1913) (Me. R. So. 72 Atl. 57.'" and in New York. Gieney v. would a case occur where there would be any desire to pursue the fund in other hands. 57. 68 L. 993. E. Rep. but they show Thus find decisions recognizing as the statutes do the existence of this kind of liability. whereby one form of action being resorted to. surrounded as it is with so many safeguards. Scharman (1911). Jolinson v. 390. 55. As to the time when such liability begins. Merchants' Bank v. . 551. 54 Maine Trust & Bkg. there might arise estoppel against resorting to another. 203 Mass. Y. Taunton Safe Deposit & Trust Co. Not all of the cases above cited adjudged enforcement.§38] TRUST FUNI>S 81 frequent requirement I that stockholders thereof are bound by a double liability as to all of its debts. 546. 312. if ever. whether a cestui que trust's property converted by a trust company or not. see Murphy v. Y. Y. 92 Me." in Maine. Coyle v. v.). Nichols v. 1068. Md. N. Supp. Wheatley (1905). 312. St. (1899). doubt many other cases could be cited. Boldt (1907). 145 N. R." in Pennsylvania. (1911). 1S8 N. DeHaven v. in Massachu57 and no setts. and enforcing this 54 double liability in Maryland.

1899 (62 & 63 Vict. Collins' Ex'r (1916). Re Thompson's Settlement Trusts. L912). raised in America. The diffi- culty once existing in 1 '' England to the effect that corpora- tions could not act as joint tenants Act of Parliament. respon- sibility and equipment are desired. p. 220. 395. Ch. co-executor. V/ Joint Tenancy Act. 1 2. Ky. friends or persons having a peculiarly personal knowledge of the family's affairs or long connected with a particular enterprise or business." 2 A provision in a will appointing a trust as executor and designat1. c. 2 was obviated by an appear to have been and does not A "of a trust trustees. Underbill's Law 2 of Trust & Trustees (7th Ed. 1913). when trust company experience. company may be appointed one of several under a power authorizing the appointment trustee or new new trustees. 1 The authority of trust companies 2 to act in such capacities cannot be doubted. or as agent for personal fiduciaries has afforded a happy solution problem of management. Alexander (1905). joint executors. In General.CHAPTER VIII Trust Companies as Co-Fiduciaries and as Agents for Individual Fiduciaries § 39. 181 S. 20. 1115. 395. . ing an individual to act with it was construed to intend thai both act as Varble v. together with the direction and judgment of individual relatives. Thompson v. W. p. The joining of a trust comto the pany as co-trustee. cited in Underbill's Law of Trusts & Trustees (7th Ed. .

it 3 the independence of the joint trustees — one of the possi- ble considerations in the establishment of the joint trust. It is submitted. Any one of several trustees may receive rents. p. The trust company usually performs all the minisIn so doing it may be the terial duties of a joint trust. would apply with greater force to the appointment of one of their own number. Purdy v. ish). Co. 1905). 6 care to one of their number. p. Lewin . though all must concur in a conveyance.) 292. Cottam v. 462. it would seem as if every argument which might be urged in favor of the right to appoint an agent generally. 855. agent of its co-fiduciaries. citing 291. Lewin on Trusts (12th Ed. 243.. 3. 808. same rule as to dividends on stock. pp. that there would be no such objection to an original appointment of the company and an officer by the creator of the trust. Y. for then the idea of independence would be impliedly excluded. however. a function which the law permits. 5. 325. 472. 145 N." By ties reason of its facilities the trust company has the and securi- better right to take the custody of the deeds The law authorizes cobelonging to an estate. such commit fiduciaries to Allen on "The Law of Corporate Executors and Trustees" (BritLewin (Ed. 4 the Court said unquestionable that in the performance of their duties as trustees they had a right to appoint an agent to do some portion of their work. 4. and it is equally undoubted that in appointing an agent they were not precluded from appointing one of their own number. Lynch (1895). and a new individual trustee is to be desigIt nated to fill an official would be improper to appoint of the trust company. Thus. On the contrary.: §39] CO-TRUSTEES 83 has been suggested that where a company is a co-trustee. "It is in a New York case. Eastern Counties Rail on Trusts (1905). as this would destroy a vacancy. 1 John & H.

& Eng. in contemplation of law. it is held that the fact that they do so join is not conclusive evidence of their joint liability. Law of Trusts (2nd Ed. 1891) 243. or to prevent it from being accomplished. End. receipts and discharges. of Law 1071. and that these are as follows: Where the trustee receives trust money and "I. See Chapter X of this book. provided the transaction is a fair one and there is no breach of trust. hands it over to a co-trustee without securing its due application. either committed or meditated. and abstains from taking the necessary steps to obtain restitution. "Such joinder may be explained and each trustee will be held liable individually no further than assets which have come into his hands." An ways in 7 English text writer states that there are three which a trustee may become liable for the default of his co-trustee. to some extent. permits a co-trustee to receive trust without making due inquiry as to his dealing Where he "III. money with it. 7. 8." creating the trust The instrument may negative the operation of the above rules.84 TRUST COMPANY LAW § 40. As the law requires them to join in conveyances. Where he becomes aware of a breach of trust. . 28 Godefroi's Am. the powers and liabilities of co-executors apply to the 6. at least. [§40 Liability of Joint Trustees. It is said that the same rules that apply to trators. 8 by the insertion of indemnity clauses. Co-trustees are but one collective trustee. Liability of Joint Executors and Adminis§ 41. "II. and must exercise the duties of their office in their joint capacity.

P. were held nut liable. 12. Lewin on Trusts (12th Ed. :. a full and absolute control over the personal assets of If an executor join with a co-executor the testator. therefore. 532. S. L. 425. v. 15 Eq. Lewin on Trusts (12th Ed. 263. 185. in a receipt. Rep. also. as it is its assumes no direct is accountable only to principal. N. 809. 13 are made 9. Lee 286. 2 Moore C. administrator or a trustee. 1 Ch. he interferes when the nature of the office lays upon him no such obligation. 2-9 Cyc. 4 E. Sec. :::. T. R. they arc liable upon joint receipts under circumstances that would not render co-trustees responsible. 204. owing unco-administrators. Sneyd. L. citing Brinsden v. Sec. unless it knows that a breach of trust 11 being committed by its principal. it was a rule very early established. 11. of co-administrators. ciaries.§42] AGENT liabilities 85 9 powers and But. Perry on Trusts & Trustees. Perry on Trusts & Trustees. v. executor has. Sankey. Levton . where solicitors who acted as agents in paying (1894). 27 L. An ity is agent for co-trustees should see that its authorderived from both trustees and that payments to both of them. that if executors joined in receipts they should be answerable each in solido for the amount 10 But this strict rule has been of the money received. C. 10 Liability as When a trust Agent for Individual Fiducompany acts as agent for an it executor." varied and relaxed in later cases. Williams Ch. S Taut. 21 Wkly. § 42. independently of his co-executor. where agents were held liable for paying over trust funds on an investment which they had notice was in. unauthorized.) 2!>7.) 304. "An he does a wanton and unnecessary act. Fladgate (1S91). 813. and to the fact that co-executors like co trustees.7. 306. See. liability to the beneficiaries. trust money upon an investment arranged by the trustee without knowledge that the investment was unauthorized. have a several power over the estate. and Blyth v. Rep. and. 583.

by assisting them to establish themselves in life or other1 wise lessening the burdens of government. S. 34 N. 174. Jackson v.'" This the situation of a trust charities. have authority itself to establish or to spend its corporate funds for. Trusts. any corporation may hold estates for charitable purposes "in accord with or tending to promote the pur- poses of its its creation. 107 U. Phillips (1867). J. - 3. citing 2. Whitcomb (1908). for the benefit of an indefinite number of persons.) 733. 17 L. See "The Story of Trust Companies" by Perine.CHAPTER IX Trust Companies as Trustees for Charities §43. 779. suffering or constraint. either by bringing their minds or hearts under the influence of education or religion. Tudor's Law of Char. 2. In General. although such as it might not. largely It is ruled that because of their perpetual existence. Habersham (1883). Eq. "A 'charity' in the legal may be denned as a gift to be applied consistently with existing law. 74 N. 69 Atl. 482. by is charter or by general laws. Carter v. Whiteford's Law of Char. S. . Taylor v. R. or by relieving their bodies from disease. H. Jones v. sense. 14 Allen 556. Bryn Mawr College (1881). (N." Corporations have long been recognized as the best means for the administration of these 2 trusts. Ed. It is company acting as trustee for bound to conduct its own business for 1. 27 L. 101. 401. A.

" A copy of this resolution is contained in the appendix of this book. 429. See Trust Companies Magazine (Nov. The trust company's perpetual existence. "the community" trust." established 1915. a new field for namely. § 44. Appendix." To Mr. 1914. jects. Origin and Plan of the "Foundation" or of Cleveland. discussed in the following section. its equipment and expert service. The Boston Safe Deposit and Trust Company has adopted the idea. a Community Trust. for COMMUNITY TRUST thereby is 87 its solvency maintained and adeits quate security afforded to not. commend its employment in such a relation. Its unique position in this regard has evolved its activities. Goff: "To receive and to safeguard donations in trust under supervisions and regulations imposed by state legislation. to "Permanent Charity Fund. for educational and charitable purposes in a broader and 4. It can- expend it its own funds on its charitable ob- but in accordance with charter right to act as trustee for others. is "Community Trust. cestui que trustent. may accept the management and distribution of funds devoted to charitable purposes. p. H. a copy of which is contained in the employ the principal or income. Goff the credit given for originating a public service theretofore unper- formed. XXI. therefore. with changes in general form and wording. or both. At his instance the directors of the Cleveland Trust Company on January 2. Vol. F. adopted a resolution creating "The Cleveland Foundation. The purposes of the community trust are thus stated by Mr. Ohio.. . At the date of this writing the 4 plan has been literally followed in a number of cities.§44] profit. 1915). in its September 7.

than it is now pos- provide for specific needs stipulated by the donor to insure the perpetuity of principal when that is desired. Many charities have been rendered useless because no . to guard against unwise use of income and principal by beneficiaries and by a union of available funds to promote the civic. but the number of it applicants for its assistance are small." is now a very large one. bona fide.88 TRUST COMPANY LAW in future years [§44 more useful manner . to lessen preventable errors of sible to anticipate. namely. to judgment in the disposal of principal and income. . its uses and distribute its benefits wisely Sec. wisest. all This was created "to furnish relief to poor emigrants and travellers coming to St. moral and mental welfare of the people in the widest. Travelling to the 1 West is not the difficult and expensive task that was in the frontier days and present immigration laws keep paupers out of this country. 986 Dillon's Municipal Corporations. most economical and most efficient manner. this situation." In the words of the pamphlet describing the Spokane Foundation. to settle in the West. The "Community would meet Trust. the Mullanphy Emigrant Fund." by its elastic provisions. A notable example of this is cited in the pamphlet describing the St. and in a way to make each dollar effective for "the greatest good. it would keep a gift or bequest "alive to the needs of the hour and change 5. enabling the trustee to meet the new conditions which no benefactor can foresee. Louis Community Trust." The most distinguishing feature of this trust is the wide discretion as to objects. Louis on 5 The fund their way. one had the power to change their purposes.

This has not as yet been directly tested with respect to the so-called "community trusts. The Court said that charitable trusts "are sufficiently cerand determinate if the class of the beneficiaries be in general outline.. the "desti- tute of the earth. 739." They relied upon a prior decision in which several general charitable ob6. (1909). need not be noticed in this work." among tain this vast class The power to was vested select the individuals in the society. Kasey v. the society. Fidelity Trust Co. the inwhich was to be paid to a specified society. where a company was appointed trustee of a fund." but the principles in- volved have been very fully considered. namely. the provision for varied. had no power to select either the immediate or ultimate beneficiaries. in this case. namely. but the distinguishing feature of these trusts.§45] COMMUNITY TRUSTS in the light of 89 civilization and broadly the deserving § 45. . lection of the ultimate beneficiaries. broad and changing objects. e." —This form of upon them. The indefiniteness pertained to sei. leaving to the trustee named (the society) the discretion to select the immediate objects of the class named to be the actual beneficiaries of the bounty of the settlor of the trust. which in turn was to apply it "in distributing the Bible or Word of God to the destitute of the earth. 131 Ky. The immediate beneficiary. The trust company. 609. 115 S. The Legality "Community Trusts." it was held that the object was sufficiently definite to establish 6 the validity of the trust. deserves more particular attention." apparently framed with careful regard to the limitations upon charitable bequests which the varied attacks of disappointed relatives have placed These limitations. advancing of and demands of trust is the time. trust terest of Thus. W. in general. was named.

Utica Trust (1914). Green. Law (1893). 701. 880. & Deposit Co. 396. 8 where it was held that a devise in trust to be applied to such charitable. Rep. Y. in the power to choose between several charities and indenniteness in the power to select the beneficiaries of a particular charity.90 jects TRUST COMPANY LAW [§45 were stated and discretion as to proportion and manner of payment among them was vested in the trus7 No distinction was made between indenniteness tees. in the judgment of the trustees. . Y. A. The decision in the famous case of Tilden v. R. 41. will render it most widely and substantially beneficial to mankind. New York v. 487. has led to an enactment in New York which provides that no charitable gift shall be deemed invalid by reason of indenniteness or uncertainty of beneficiaries. are extendedly considered in a note to Perry on Trusts. 9. St. E. 130 N. 78 S. v. Y." in respect to the wide latitude given for the selection of The cases on this subject different kinds of charity. was void for indenniteness and uncertainty. Thomson Charitable Uses Act. Note (a) (1891) Sec. Leak's Ex'r (1904). Law Rep. 10. c. 28 N. It is difficult to see how any such distinction can logically be correct. 29. W. are authority for the legality of the so-called "foundation" or "community trusts. 1703. educational and scientific purposes as. 25 Ky. 14 L. 10 7. 8. Misc. 729. though the beneficiaries are indefinitely described. then the made. 149 N. If this conclusion is many well considered cases holding that charitable trusts are valid. 27 Am. 87 N. Leak's Heirs 471. 33.

In General. 460. 2. 1 relief. Hughes on Contracts. page . Annotated. so long §46. Thus parties cannot contract for immunity from fraud. "except for its own wilful and intentional breach. of course. as established rules of public policy are not violated. gross negligence. or so-called "indemnity clauses. nor can they contract away the right of an aggrieved party to apply to the courts for § 47." is considered in a part of this book entitled "Mortgage Trustee Clauses but a particular application of the broad power to abridge the ordinary duties The effect of such abridgment with reof trustees. 18." 2 This. or their own wilful wrongs. 3. Sees." The power to insert and rely upon such clauses rests upon the broad right to contract as one pleases. is 1.CHAPTER X Stipulations for Protection of Trust Company- Indemnity Clauses Often the duty to be performed in a fiduciary capacity is attended by risks which a trust company cannot safely assume without stipulations for its protection. Examples and Construction of Clauses— Co-Trustees. The effect of clauses Indemnity exempt- ing a mortgage trustee from liability. Appendix. 16.

"though but for the special power they would have been declared liable on the ground of crassa negligentia. R. liable for not making inquiry as to disposition of funds. shall not be obliged to see to the application thereof. R. for losses from speculation by the other trustee. that in "the majority of cases the attempt of the trustees to evade responsibility by virtue of indemnity clauses has been sion made without 6 success. 116. Gummow. Ch. 719. N. 21 W. Wilkins v. Adams. Hale v. 665. digested in the note. notwithstanding indemnity clause. Rehden v. S. 7 O. though indemnity clause provided that the trustees should not be liable for involuntary losses. 29 W. R. caused by neglect in riot obtaining proper valuations. Wesley. Lewin on Trusts (12th Ed.). did not relieve a cotrustee from liability for giving defaulting trustee power to draw from a bank account.— 92 TRUST COMPANY LAW is [§46 spect to the liability of co-trustees 3 well illustrated by an English decision. McCarter. 9 Canadian Law Times (1889) 1. N. holding co-trustee liable. holding inactive executors 6. holding default. R. 5. and irresponsible for any loss unless through wilful neglect or Robdard v. though the will provided that each of the executors should be responsible for his or her acts only. 332. and the fraud was concealed for two years. 29 Beav. holding position of the funds. Cooke. that a clause in a will providing that trustees should be responsible only for such moneys as they should actually receive. 47. 555. or shall do or concur in any act enabling his co-trustee to receive any moneys. T. how41 ever. 25 W. trustees liable for loss by investment on insufficient security. 43 L. the two were not liable. holding that indemnity clauses must be strictly construed. 7. followed in Pass v. 36 L. R. 213. 243. where two trustees under power enabled a third to receive moneys." this It was held that. who misapplied them. Here a clause in a will provided "that any trustee who shall pay over to his co-trustee. 3. 10 W. McCarter v. T. 504. 400. S. R. because he had taken no steps to secure the proper disBudge v. Hogg." It has been said. Dundas." 5 This conclu- was drawn from a review of English and Canadian cases. 3 Giff. L. nor shall such trustee be subse- quently rendered responsible by an express notice or intimation of the actual misapplication of the same moneys. and that where a deposit is really an investment it will not . page 305. 4.

554. he was liable because after learning of such dethe fault. Connolly. — . 5. and the proceeds misapplied. With reference to the indemnity clause. holding that mere negligence or imprudence may be wilful default. the Court said: ful default' "The words 'wil- imply more than negligence or carelessness. after the marriage. holding trustees liable for not making inquiry as to security of an investment. the word 'wilful' means intentional. providing that trustees shall not be liable for loss of trust money deposited with any banker for safe cusBrumridge v. notwithstanding an indemnity clause providing that the executors should not be chargeable Drozier v. though unintentional. L0 Beav. Greenwell. etc. 477." The Court regarded the action of the co-trustee. The trustees. in permitting him to collect rent and interest as "a wilful (Continued from preceding page) 6." not liable. Y. Brumridge. thus it was evidently the intention of the testator to relieve each trustee from everything but his individual intentional transgression. Connolly v. 15 Beav. 412. Burford. the property of the intended wife. Supp. 13 Sim. v. 43 N. 89 N. 409. holding an tion of funds by a co-trustee. 569.§46] INDEMNITY CLAUSES In a 93 New York 1 case 7 a will contained the provi- sion: "And One exempt every trustee of my will from lia- bility for losses occurring without his own wilful de- of the two co-trustees defaulted for a large amount of the trust funds. 221. Brereton. Matter of Mallon (1904). 7. The trustees were held liable. and the stock was sold by the husband. 17 Ir. but as to the amount of which he was in- formed. Ch. where a settlement contained a covenant and agreement that £. but for such money only as should actually come into their hands."). Compare Elliott v. As to the part of the default. clause does not exonerate a trustee from the consequences of misapplicaDix v. except for their respective receipts. 19 Beav. of which he had no knowledge. V. although the trust deed contained a provision that they should Fenwick not be responsible for deficiency in title or value of securities. while the word 'default' means transgression. holding that neglect may he wilful. Misc. the innocent trustee was fault. executor liable for misapplication by a co-executor. after he had direct notice that the other was a defaulter. 20S.000 stock. 27 Beav. took no steps to enforce the transfer. although there was an indemnity clause providing that they should not be liable for any casual or involuntary loss without their wilful default. come within an indemnity clause. Turner. Rep. holding that an indemnity tody. should be transferred to trustees. he permitted the defaulter to continue in performance of active trust duties.

c. nevertheless.94 TRUST COMPANY LAW [§48 default. broker. An s. Eq. 378. or faults of the other in which they did not jointly participate. in Spright v. or other person. Ca." liability from This was held not for any misfeasance by his co-trustee. But this clause does not authorize a delegation of the trust in any case in which there is no 'moral necessity from the usage of mankind' for the employment of an agent per . 234. J. English text 31 of Lord St. enacted that every instrument creating a trust should be deemed to contain a clause exonerating the trustees from liability 'for any banker. diligence and to relieve a trustee fidelity. Ex parte Belchier." 8 In a New Jersey case an indemnity clause provided that neither of two trustees "shall be held responsible for the acts. Examples and Construction of Indemnity Clauses —Employment of Agents. 218. 9. is. its application according to the terms of the trust. 9 App. And the true effect of such a clause. but declaratory of the law. to enjoin or to compel restitution of the property and § 48. that p. with whom any trust moneys or securities may be deposited' a clause which. in wills and settlements. Lord Selborne. 5. 23 Vict. 8. writer" states that: "In conformity with the rule laid down in Amb. . omissions. is. not uncommonly in- serted. Godefrois' Law of Trusts (1891). Gaunt. 20 N. which is it in fact. in similar terms. unless he takes measures. Hearn (1875). by suit or otherwise. throws the Crane v. p. or of which they are not jointly guilty and that their respective liability and ac- countability shall not exceed beyond the exercise of or- dinary care. 35). Leonards' Act (22 & — we may observe. within the meaning of the testator's will" and that "therefore he should be surcharged with the same.

See Rehden v. 213. when the propriety of employing an agent has been established.§48] INDEMNITY CLAUSES 95 burden of proof upon those who seek to charge an executor or trustee with a loss arising from the default of an agent. Re Brier. 29 Bea. llvison. Brier v. U 'eslcy. D. 238. 26 C." .

properly been pends in no inconsiderable degree upon the character of the persons who are selected to manage the trust. (1881). further said in this case that: this nature. reliable "In trusts of and is. . One of the is uses of the modern trust company most important where by a writing somewhat similar to an escrow agreement. Form of Instrument to Secure Bond These instruments are ordinarily called mort- gage deeds of in serial ing. said that the salability of the has very bonds de- Merrill v. As to these securities. as well as in 1 name (was) created for the security" of such owners. 297. and their interests in the property protected as far as that can be done by fidelity and attention on the it part of the trustee. intelligent parties are commonly selected to receive them. trust. Farmers Loan & Trust Co. They convey property to the in trust for the security of owners of negotiable bonds to be issued number up amount prescribed is in the writit that : When such "A trust in It is an instrument fact accepted is said is and in law. 24 Hun. responsible." 1. the company participates as trustee in behalf of bondholders of a mortgagor. Issues. Preliminary. but greatly more important for the trust features therein embraced. § 50. for the purpose of assuring the creditors (that the future bond holders) that they will be faithfully executed for their benefit.CHAPTER Trustees for XI Issues Bond § 49.

they take holidays. in speaking of a mortgage running directly to bondholders of a corporation. its affairs. and die. its pends upon manner. lease. doing business of and its credit deprompt and efficient Legality Such Instruments. at page 48." § 51. etc. states: good many sale.. get ill. As a business asset. company to be the sole Ordinary trustees cannot always be found when they are wanted. the reliability of a corporation in the laws behind its charter. It itself out as equipped for the performance of its may never be said that a trust company duty. at others remain and . its permanence. purchase. Its business is to facilitate trust matters. "Palmer's Company which it it dents" (British). whereas a trust company is always ready to attend to business. as is the fact of its responsibility. is considered preferable to appoint a trust trustee. the supervision that the state exercises over its segregation of its its liability for its acts as trustee its from that of general liability and holding duties. especially those in likely that there will be a succession of dealings by way of investment.§51] MORTGAGE TRUSTS 97 As I have already is said. has legal advice always in a hand. said: "The frame of the mortgage now sought to be enforced differs from the ordinary trust deed or mortgage by . cases. because of the character of its may not acquire a reputation for intelligent and faithful performance of managers and their pride in the history of the company. go abroad. Part III. The United States Supreme Court. principally As to the advisability of appointing trust companies Prece"In a is as trustees for bond issues. is however. it is not character so paris ticularly that looked to where a trust company lected. If it some of its directors are absent.

Rahm (1877). though in form a deed gage. but a mere mortgage. § 52. Y. 66 Cal. Co. R.. 57. See. v. 353. McLane v. (1851). to whom the security runs as mortgagee. (1879). court case it was said: was substantially a mortof trust.98 TRUST COMPANY LAW [§52 which the payment of railroads bonds is secured. S. 46 Md. R. Issues. Butler v.. 85 U. several interests described. 359. made directly to named and their the persons holding the bonds. (18 Wall) 471. it was conceded without objection at least no objection appears of record that a trust company as — — Nashville. Ed. 2. "The instrument. 541. An early decision in New York that a trust deed to secure corporate bonds shows was legal 3 and the trust therein not one under the statute of uses 4 In a later supreme and trusts. 810. R. S. R. etc. Union Pac. 606. Active Nature of Trusteeship for Bond There is something more in the trusts assumed by trust companies for the issuance of bonds by a corporation than a dry or naked agency. R. 546." legality of many other cases might be cited where the such instruments are recognized and enforced and no 5 point was established against their validity. Merchants' Exch. 748. 5 N. 4. (1885). 48. Co. The bonds were sold in different markets to bona fide A great purchasers. also. (1899). 424. For example. Orr (1873). etc. See. also. 21 King v. 97 Fed. R. . It was delivered to the trustees and duly recorded. 6 Pac. 3. 25 L. Duluth. Co.. Minnesota v. and they are now outstanding. 99 U. L." 2 who are This was said in 1873 and seems to show that the form therein described had obtained long enough for it to have come into general use. Piatt v. 5. and the instrument recites that the mortgage is made to him in trust to secure the bonds deHere the mortgage is scribed to the holders thereof. Placeville. we think. Ed. etc. A trustee is ordinarily named.

(1S94). Ed. out of which earnings to pay bonds and interest were looked for. 51 Fed. Mercantile Trust Co. that: "The complainants here show an equitable inter- est in the fair earnings of the roads." 8 And 6. it was urged company showed no right to sue and that there was collusion between it and the railroad. & Trust Co. to invoke the aid of a court of equity to preserve the trust estate. Old Colony Trust Co. and the directors cannot exercise their judgment and discharge their duty as they should and would but for the said coercion. 641. 362. but the appeared 7 that the trust court said. affirmed (1904) 132 Fed. as it statute prescribing railroad rates. armed with the railroad commission act. Wichita (1903)." and that "said railways are coerced by the defendants. independent of the provisions of the trust deed. al. the trust company had the right to intervene in behalf of bondholders and prevent waste of assets. 536. 7. 8. and his duty." In this in the Circuit Court. v. 1014. 123 Fed. Reagan Farmers Loan v. speaking of several trust companies complainants in different suits consolidated for one decision. Railroad." In other words. 762. . 529. And where a trust company as trustee in a mort- gage deed to secure the bonds of a telephone company brought suit to enjoin a city from removing its poles and wires in alleged violation of a franchise granted to the company. "When it is necessary S.1 §52 BOND [SSUES 99 trustee for the security of the bonded indebtedness of a railroad could maintain a suit to enjoin the enforce- ment of a case. has the power. it was said : "The general principle is believed to be settled that the trustee. it is whenever the necessity it arises. et (1892). has been said that: v. 154 U. 38 L. they show actual ownership and possession of the mortgage securities of the roads.

. They L. Co. E. 661. v. Blair (1915). 180. Baltimore Baltimore Trust & G. change or compromise of the security pending default. 139 Fed. E. 9. and so certain did right it seem that was the and duty of the trust company to sue that no point 10 was made. 32 W. Holland Trust Co. Co. either in the payment of the principal or interest on the indebtedness secured. 108 N. 244. Farmers & v. 166 U. (1889). 497. But all the hondholders are necessary parties to a suit to authorize a sale. who lend their money (1905).100 TRUST COMPANY LAW [§52 to preserve the property the trustee may ask the appoint- ment of a receiver to prevent the subject-matter of his mortgage being impaired and wasted without waiting until there has been default. 673. E. Trust & S. 214 N. v. opinion. 12. 41 L. 259. act for those v. Ed. when no such power is expressly given to the trustee in the trust deed. Co. that the trust it moneys on all special was held by a company could bind 11 majority of the bondholders of the company. Meridian Waterworks Co. Trust Co. Colorado & Southern Ry. 160. As showing how greatly trustees under a railroad mortgage are regarded as fully representing those whom it secures I submit the following from a West Virginia 12 "Notice to trustees under an ordinary mortcase: gage-deed of a railroad company is notice to the holders Such trustees of the bonds secured by the mortgage. 10. Fidelity. Railroad Co. N. (1897)." There are manifold instances of suits by trustees where the integrity of a corporation's property is impaired or it threatened. 840. Y. 177 N. Sutherland (1904). D. Y. . S. negotiating for the of agents light in the are considered of the loan. etc. 11. 327. v. 9 S. Where the coupon holders under a trust mortgage are very numerous and are unknown to the trust com- pany and a question arises for judicial advice in the matter of the distribution of certain deposit to pay coupons. Va.

303 (185G). is Notice to the trustees held to affect the to title in their bonds with reference incumbrances upon the trust property. et seq. re- moval. 10. 449. 660. Taylor (1884). Sec. Unity Co. 32 N. 101. The principle of a trustee of an active trust being capable of acting of his own duty and is 15 responsibility so as to bind the beneficiaries fully discussed in "Trust Estates as Business Companies. 15. E. 23 Law. 93 U. Jones on Rv. etc. holders. also. 204 111. 68 654. Stewart (1876). 155. . 52C1 Miller v. Actual notice to the trustees of a prior equitable mort- gage is notice of 13 it who therefore take their bonds subject to the legal consequences of the incumbrance. especially where are cited many where "the cestuis que trustent are numerous and constantly changing by death. Emery N.. as a late decision its limitations. II. Railroad (1863). S. L60. . Bushong Kerrison v. v. 484. v. 670. B43. however." This principle would seem to have of. to the bondholders. 595. Pierce Sec. securing bondholders. Ed. or at least this court refused to recognize leasehold in city 14 in a case of a mortgage. v. 82 Mo. having no ready means of acting together except through trustees. (1903). Securities. upon a lots. 36 Vt. and being beyond the jurisdiction" 10 of the in These bond issues are negotiable form and the principle of intent being to vest with the trustee every 13. Equitable Trust Co. whom the law appoints to act for them. it. Sec." authorities. They are charged with the duty of protecting the interests of the bond- who are unconnected individuals.§52] BOND ISSUES 101 on the security of the mortgage. court. . to precisely the kind of bondholders spoken by the supreme court of Illinois it shows.

where a "bonus" is offered in the way of a site or subscription by a municipality or inhabitants to secure the location of a manufacturing or other company. for Theory and History Issues. The bond theory as a means of aggregating the contributions of many small investors in the building up and prosecution of large an extension merely of the stockholder theory. The making of these mortgage deeds of trust prestockholders ceded the trust company as a business institution in this country and individual trustees were chosen. these concessions were taken into account in such a large way. In such cases the law accommodates right its ruling to the usages of business. the presumption of intent furnishing the basis for the principles of law declared. was insufficient for such enterprises as were encouraged by the government enterprises is in the making of large land grants out of its extensive domain. state aid and state guarantees Like government land grants. Take . however. The latter theory. which bond issues could be predicated. upon Further than this. that would arise out of the contributions of The same observation applies alone. of Mortgage-Deeds Bond It has been said that the advent of corporation bonds secured by a mortgage deed of trust was when steam railroads began. that there sprang into existence confidence in railroad enterprises wholly apart from the tangible often were afforded. projected railroads appealed to communities along proposed routes for county and municipal aid. property. indeed.102 TRUST COMPANY LAW [§53 and duty to take care of the interests of holders of such paper seems an absolutely necessary one for the world of business. and. thereby creating an expectant interest. § 53.

Y.. The Central Gold Min.§54] COVENANTS 103 where a railroad mortgage deed of 17 1865 was decided. mortgage deed securing bonds of a mining company executed so a And authorized individual "trustees or the survivor 18 of them" to take steps upon default. . but was exonerated by a majority of the court. 32. (1902). Piatt (1870). Y. v. but accepts the trust which provides in express terms the duties of the trustee in the event 10 of default in the payment of interest and resulting foreclosure and sale." This mortgage-deed specified the purpose for which the net proceeds of bonds sold should be paid out to the company on orders and requests. etc. in 1864. 519. 4 Biss. v. trust such affairs company became the natural agency in and legislation recognized a business need. E. "which shall include a written statement or memorandum declaring the purpose or purposes. The § 54. 18. 19. 3 Daly (N." But there was derived from the This was said to create "the between it and instrument an implied covenant in the execution of the acceptance by the trustee. Farmers Loan & Trust Co. Express and Implied Covenants in Mortgage-Deeds of Trust. Co. 172 N. It has been said that in the ordinary railroad mortgage "the trustee enters into no positive covenants. 35. This was the be- company trustee. the trustees were individuals. 20 Fed. Rhinelander 65 N. 499. appointed the complainant" in his place. they are to be appropriated for. (1865). of trust in 1867. Pullan Cincinnati.) 263." not observed by the trust trustee 17. R. v. but of the two trustees one had died and the other. the Wayne Circuit Court. "becoming old and unwilling to perform trust given prior to for example a case the trust. Co. relation of trustee and cestui que trust future bondholders. Cas.

yet specifically restricted the defendant as to the use to be made of such bonds or proceeds. which was agreed to by three of the seven members of the court. and which.104 TRUST COMPANY LAW [§54 cause at the time of suit bonds outstanding were but 25 out of 15.000. but it was a trust. The dissenting "The trust imposed on defendant (the opinion said: trust company)." man that the securities were of little or no The dissent in this case. but the majority held that the implied covenant did not come within the twenty year statute of limitations as the express covenant did. but tended to ignore or disregard the provisions of the agreement and permit the entire property of the corporation to be squandered." who were The two opinions agree in general principle. or to dispose of the proceeds in that manner. it covenanted to perforin. to be ascertained in the If that manner provided. and an examination "would have disclosed a condition of affairs calculated to satisfy a reasonable value. contends. while it conferred on the deat least fendant the property of the other parties to the agreement. and required it to apply them only to the purposes specially enumer* it ated. then it intended to commit a fraud upon the bondholders and others interested in the contemplated railroad. was not a general one by which it was authorized to issue the bonds and transfer other proceeds to the party of the first part (mortgagor) or others whom it should designate. by implication. which it in terms accepted. and these were acquired after the breach of trust had occurred. * * in- was not the intent of the defendant. that the implied covenants were not to be excused by any such reasoning as the majority adopted. . which.

that the trustee be vested with power Fed. Eq. 21. provides for grantor remaining in possession until default. express covenants. . 1G9. they nevertheless show the active duties this imposed on a trust company undertaking a trust. Form of Mortgage Deeds of Trust. Security Trust & SafeDeposit Co. 20 While these cases distinguish between express and implied covenants. i:>4 Mo. (1S99). J. this self-executing. 57 X. People's Ry. 215. § 55. Rumsey v. 42 Atl. v. New Jersey Paper Board & Wall Paper Mfg. 107 Fed. sometimes providing for trustee releasing portions of the property upon condition that proceeds are turned over to trustee or reinvested in other property . Farmers' Loan & Trust Co. 615. 746. 95 affirmed (1901). easily kind of The objection as to the statute of limitations might be avoided by making other covenants. they being described in serial numbers. If it is provided that the bonds shall be- come due after thirty days is from default 1 in payment of coupons. 5. that the trustee may enter upon default 20. than Details in the one to foreclose on default. fected after The form of a mortgage-deed of trust as permuch litigation may be referred to as someits what typical in nature." . (1899). that grantor will pay the bonds and coupons secured. Co. (1900). that grantor may sell old material free from the mortgage-deed of trust. Frishmuth v. W. either upon initia- by a certain proportion of the bondholders. that principal shall be declared due upon default in interest. 603. so far as the statute of limitations is concerned. that grantor shall pay all taxes and liens and maintain the property tive of the trustee or in repair. Tt conveys the fee to the trustee.§55] FORMS OF TRUST 105 There is the same distinction in a federal decision in regard to statute of limitations in which the same mortgage deed was involved. 55 S.

Ry. and so far as bonds and coupons are secured. Co. Examples of various "trustee clauses" and judicial construction thereof are contained in the appendix to this book. and was properly signed. 49 N. v. First Nat. R. (1884). Guardian Trust Co. Morgans L. 176. Nature and Extent of Implied Duties. 172. § 56. S. 130 Mass. Salisbury (1881). He would ascer22. Fadden 932. v. J. 34 L. (1911). ( etc. This. however. 22 Atl... 24. 807.. R. 260. is regarded as an alternative and not an exclusive remedy. Y." A provision is generally inserted exempting the trustee from any and all liability except for willful misconduct or gross negligence. 137 U. He would see that the mortgage was recorded. v. He would ascertain that the instrument was legal in form and authorized by law and by the corporation. T. 144 N. R. Memphis & L. (1890). is the ordinary frame of a mortgage-deed There may be other provisions agreed upon by the parties. v. 625. etc. trustees "are regulated affect all trustees. it is provided also that the trustee shall certify on the bond that it is one of the issue referred to as being secured by the mortgage-deed it purports to come under. Ed. 303. 863.106 TRUST COMPANY LAW [§56 of sale. 23. McMays Landing. This of trust. N. Dow Co. they should "exercise the care and diligence which would naturally be expected of an intelligent person acting in like circumstances to protect his own mortgage. Y. (1891). 20 Fed. Ins. Supp." 24 Such a person would naturally examine the title and the security. & Texas. ." 23 Mortgage of law which by the general rules In the absence of ex- press limitations. App. Eq. R. etc. Also the instrument should provide for the appointment of a new trustee in case of resignation or removal. Div. 129 Patterson v. He would examine the property at intervals to ascertain whether its value was depreciating.

however. and especially trusts of 25. 500. do the mortgage loan. are enabled to make a brief memorandum. 31 Vt. Knapp (1858). it is the usual and safer practice to specifically provide for this contingency. & Eng. 27. more or less. constructive additions. . (1913). 52. page 460. 26. * * * But upon no subject is there so much demand for the exercise of construction. the very terms of the deed will necessarily raise implications in the sense referred to in an early case. limitations and specific tain that adequate insurance powers are inserted It in the trust deed. 843. in matters of contract. Sturges v. which does not express one-tenth part of what is intended. Upon default in payment of interest or principal he would bring foreclosure proceedings. speak truly. 240 Pa. and of judicial implications. Cas. Co. Nay Aug Lumber Co. as in regard to trusts. Scranton Trust 35 Am. not usually care to assume such responsibilities. was said that "All contracts are. v. and implied limitations. In addition to the duties implied by the acceptance of such a trust. that such a trustee has the implied power to bid at a 20 foreclosure sale in order to protect the bondholders. so as to prevent its disposal at a price that would not protect Mortgage trustees. Anno. S7 Atl. See Appendix. St. and fully the mind of the parties. And he would be prepared to bid the property in. appears to be necessary to negative most of the duties just enumerated to prevent their assumption by 25 And though it would appear the mortgage trustee.: §56] IMPLIED DUTIES 107 was maintained and that taxes were paid. These are the powers by which courts. where it 27 subject to implica- tions. 235. and to protect themselves therefrom.

Y. L33 X. Liability of Damages for Breach of Trust. and the amount of its liability to them constitutes a fund in which limited. 148 N. mortgage trusts given to secure the issuance of bonds. was in the corporation or in the bondholders. & Eng. in the trust deed as to the Mortgage 29. The trustee not responsible for the accuracy of statements indorsed upon the bond or contained 28. The liability of the respondent is and it runs to all of the bondholders. Liability for Misrepresentations as to is Quality and Extent of the Security. "Strangers to the trust deed" cannot hold the trustee responsible for The performance or non-performance of the trust. Y. Y. Kaulbacb Knickerbocker Trust Co. . Failure to properly fulfill an express or implied duty under the trust deed imposes 28 This liability runs only liability to suit for damages.108 this complicated TRUST COMPANY LAW [§58 and public character. e. or by an action by the corporation for them. (1911)." 35 Am. § 57. affirmed without opinion (1914). See note on "Liability for Negligence of Trustee in Corporate to Bondholder. Y. to the mortgagor and to the bondholders. 871. Cas. Knickerbocker Trust Co. L32 X. Condon (1911). if any. but only by an action by all the bondholders or by a representative action in their behalf. 147 N. or by both the bondholders and the corporation. 350. Supp. v. 30. Div. App. App. 613. —Parties. or both.. 9." Trustee for i. Anno. Supp. and 29 could not be enforced by a single bondholder in his own right. v. 212 N. question of a single bondholder suing in his own behalf 30 was thus commented upon in a New York case: "The cause of action." § 58. Div. 331.". 239-241 (1915-A). they are all interested. for neglect of duty on the part of the trustee and for an accounting. V..

203 X. Supp. Nash !:. R. 54 X. >iv. 437. New England Water 30!i. & Trust Farmers' Co. E. Y. will. made by duly authorized officer or employe. St. Ins. 629.cr^cr v. or advice of the court should be secured in the manner set forth in the next section of this book. where under instructions from the mortgagor. (189(5). 46. this character is provided by the trust inserting a specific clause to that effect in The moved in duties of the trustee are ordinarily so far rethis regard that it has no presumptive authority proposed purchaser as to the value of bonds or the relative priority of the mortgage But a fraudulent statement by a trust company. 34 X. Byers v. 38 Ohio Cir. See Appendix. & T. (1893). Citv Trust Co. Davidge v. Supp. 96 X. Guardian Trust I Co. (1914). (1906). v. Union Trust Co. reversing L36 X. 331. of to make. trustee. . Instructions of Mortgagor and Bondhold- ers as Protection to Trustee tee is — Majority Rule. Instructions or acquiescence by there is if The bondholders who sanction acts or omissions of Tschetinian v. App. Minnesota Title Co. Y. §59] INSTRUCTION 109 1 quality and extent of the security/' An extra precaution. 150 X. 159 Mass. L. Ct. V. whose so acts coupons are excepted from payment. M § 59. 78. 32. in respect payment of interest 35 it was acting as the agent of the to its duties as is debtor corporation. Dreifus v. 34. K. I L900). 175 Pa. doubt as to what should be done in their behalf. however. Guaranty Trust Co. to for. against claims of deed. 31. 432 N. Y. 33. Y. them should be sought. 34 Atl. Hunsl.representation to a course. Union Savings Bank & Trust Co. v. V.. (1913). Co. the trust But with relation company acting for the bondholders. page 468.. 66 X. L90. 318. Div. 1S6 N. 811. 751. it A trus- protected from liability to a bondholder. render it liable for the damage caused thereby. App. 625. 35.

100 U. 37. 757. He should be reasonably satisfied that the general interests of the trust will be best subserved by acting with the majority. S. It has been said that: "It is not improper that (the trustee) shall be governed by the voice of the majority. & Columbia Knickerbocker Trust Co. Washington Oregon Corporation (1914). 141 N. 217 Fed." Frequently the trust deed contains a provision that "in all 3 matters of judgment. discretion or policy * * * the trustee shall be fully justified and protected in acting conformity with any request of the holders of a ma38 jority in amount of the bonds. Little Rock & Forth Smith R. That the majority may delegate to a committee power to give instructions to the trustee. v. 249. Co. 25 L. R. Supp. 112 N. also. (1894). 39 Application by Trustee for Advice and When in doubt as to its obligations. "whether by previous consent or subsequent ratification. see Fidelity Trust Co. G. East Tennessee. 612.110 TRUST COMPANY LAW [§60 the trustee. for then the minority have which others may not waive for them. . Y. Ithaca St. (1913). 369. Shaw v. Ry. see. V. 180. 38." § 60. Co. (1889). (1913). In fact. acting in good faith and without collusion. R." are estopped from claiming that such 30 acts or omissions constitute breaches of trust. 168. 20 N. mortgage trustees have recourse to an application to the court for advice. 39. v. Ed. v. Supp. 36. 486. if what they ask rights is not inconsistent with the provisions of the trust. 588. Butterfield v. Y. N. E. Y. 249. Co. Ithaca St. (1880). Cowing et al. When a majority of the bondholders seek to instruct the trustee. 141 the Columbia Knickerbocker Trust Co." The limitations of the "majority rule" were thus in stated by Circuit Judge Lurton : "But the trustee can- not blindly submit to the domination of the majority. they have been Instruction of the Court. another question is involved. Toler v. 67 Fed.

and a court of equity has been 42. 70S. Here the Court said: afforded in the case "An actual dispute has arisen between the morttrustee. 10 Pennsylvania a balance its where the trust company turned over mortgagor. as a result of a mistake as to the Court said: to a duties. 554. "The lawful claims of the bondholders are not to be refused on account of mistake of this nature by the trustee. it might have made application to the court. SS Atl. the court will not instruct him in such an emerlimitations The gency. v. 75 Atl.§60] INSTRUCTIONS in the 111 censured for not so applying. An instance of an actual dispute as distinguished is from a mere mooted question 42 cited. 41. 29. 241 Pa. If it was in distribution of the funds doubt as to the manner in which was to be made. (1904) 177 N. 327. Y. he is not justified in coming into a court of equity asking for instructions. (1913). Sutherland: 41 "It is well settled. did so at own upon the right of a trustee to file a bill to obtain the instruction of the court was thus stated in Holland Trust Co. 227 Pa St." Having made voluntary distribuits tion without application to the court. 9S6. v. an actual dispute as to his legal obligations. where the trust instrument is plain in its terms and the duty of the trustee clear. Appeal of Colonial Trust Co. Thus case. and secured a it judicial order of distribution. gagor and the 40. It is equally clear that where he is called upon by the nature of his trust to exercise discretionary power. (1910). Struthcrs Coal & Coke Co. risk. ." It should be further noted that a trustee except where there is is not en- titled to instructions. Union Trust Co.

in a genuine contest. Dickcrman v. and in its determination the court ing with any mere abstract proposition. and it was not necessary to show in whose hands they were. 423. In a case where it was objected first that a decree of foreclosure could not be justified unless the bonds produced it was said: "It was sufficient to prove that the bonds were valid and were outstanding obligations of the company (mortgagor). an order to that effect could only result in delaying a decree indefinitely. since in cases of corporate mortgages the bonds are often widely scattered. implied 181. under the contract. or to require their production. This but issues how completely are the rights of ccstnis que trustent under mortgage deeds securing bond committed to the is care of the trustee and. Indeed. and undertook to require more from the mortgagor than it deemed was required of it. a trustee not obliged as to any pro- ceeding he institutes in their behalf to produce the bonds themselves. correspondingly. 176 U. facts. (1900). trustee differed sharply with the debtor. Certainly this raised a question proper for the court to decide. there 43. be required to Months and even years might produce them all. or by persons totally ignorant that a suit for foreclosure is in progress. secured by the deed of trust were owned in foreign countries." Singleness of Duty Owed by Trustee is Bond Issues. . In the representation of the interests of bondholders. The practice has been and sale without their illustrates 43 to order a decree for foreclosure production" (citing cases). Ed. S. It was not dealwas dealing in with known § 61. 44 L. in its inter- pretation of the language of the bonds and mortgage. Northern Trust Co.112 TRUST COMPANY LAW [§61 The asked to decide the precise question which has arisen.

66 Fed. Intervention by Individual Bondholders. . It also appeared in the case that the trust company held a debt against the mortgagor company secured by collateral which it proposed to redeem with the proceeds of receiver's certificates proposed to be it being its interest 44. in general. N'orthcrn Pac. v." § 62. or has assumed a position prejudicial to the interests of the cestui que trust the is put aside and the cestui que trust admitted to represent his rights because in such case the trustee has not or cannot fully and faithfully repre- rule of convenience sent them. under one mortgage to cut off equities in another mortgage and under the latter to avoid or delay foreclosure. 174. R. Farmers Loan & Trust Co. and a committee claiming to represent holders of bonds under the second mortgage asked to be allowed to intervene.— §62] CONFLICTING MORTGAGES its 113 will refer the singleness of to duty in the premises. 169." All of this was said in a case where a trust company was the trustee under several mortgages giving first. It has been "It has been well held that. 1 some cases. Trustees Under Conflicting Mortgages. said that: courts can deal with bondholders only through their trustee. because the trustee occupied inconsistent positions. and that it is not to be tolerated that each individual bondholder could at his own suggestion. appears that the trustee refuses or neglects to act or stands in a hostile position. second and third liens. (1S05). proceed to assert his rights when they can be as 44 "If it But: well asserted through a trustee. and furthermore there was a conflict of interest as to whom expenses of administration and foreclosure should be charged. which leave nothing to inference as to this. Co.

" to Here it is seen that representation was not allowed any individual bondholder. but said : it "Care should be taken.114 TRUST COMPANY LAW [§62 issued. that end I should be protected from abuse. combe. or possibly conflicting obligations. be done here.. In a later case where the same trust company was named trustee under several conflicting mortgages. * * * The practice. Under the circumstances the court decided to allow representation by the bondholders other than by the trustee. as a matter of grace. And to have come to the conclusion to allow but one individual of each of these committees to be represented in the suit. LaJ. C. of . "These several mortgages are necesand it is manifestly impossible for the trustee to fairly represent both sides in the resulting assuming such a position of neutrality as would seriously affect the force with which controversies. has not been done in the circuits where the property lies. except by such conflicting interests are to be presented for the consideration of the court. to its cestuis que trustent. however. under conflicting. the admisit sion of representatives of these bondholders being probably sufficient to accomplish the object desired. This does not seem to nullify or even mitigate the duty of the trustee. quite common in railroad financiering. to the end that each mortgage interest shall thus have representation. therefore. and will not. but. it that. representation was granted to certain individuals as representatives respectively of classes of bondholders. but merely directs how the court may better determine his duty. Under such circumstances would seem appropriate to substitute new trustees under all the conflicting mortgages but one. said: sarily conflicting. while the right should be granted. This. or rather additionally to the trustee.

under a succession of mortgages. (1908). 222.§62] ' CONFLICTING MORTGAGES 115 making. Ed. 70 Penna. Y. Continental & Commercial Trust & Savings Bank v. Co. as I have said. is 40 and it is merely more certain that when a trustee such under conflicting deeds of trust. 276." 45 may tend and may lead to great injus- It is a principle firmly established that it is greatly discretionary whether a bondholder or group of bond- holders will be allowed to intervene in a foreclosure case. (1912). Northern Pac. 1895). Fed. after suit brought. (1890). there is no substitu- tion of another trustee. is no doubt a convenient one. or otherwise. and when disaster overtakes the road. The United trust States Supreme Court has pronounced trustee being such in conflicting 47 very definitely upon the question of the legal effect of a company or other In this case a trust company mortgage deeds of trust. each covering the whole or some part of the property. N. it may facilitate the effort to reorganize by making conflicting interests to it easier to constrain the various make concessions to each other. 127 Fed. v. 34 L. R. 160 I & Land Title & Trust Co. 600 47. unless corrected by substitution. but. v. is hut from the point of view of a court which called upon to adjudicate is between such conflicting interests. Tatnall. v. 423. and. Various negotiations were had between bondholders of the two deeds of trust and there was alleged to be an understanding as to a sale and reorganization for all bondholders to acquire certain interests in the reorganized 45. . also. Allis-Chalmers Co. to induce judicial error tice. l: Land Title 46. S 522. was trustee under first and second mortgage-deeds of trust. Robinson v.. 132 Fed. Iron Ry. Farmers Loan See. v. Co. intervention will be granted. City R. Co. and there was foreclosure of the first deed.the same person trustee. Trust Co. Steel Co. 305. Asphalt Co. & Trust Co. L35 U. R. 200 Fed. such practice unsatisfactory. Fed.

* * * Moreover. could have taken any steps which would have ire vented the decree of foreclosure.116 TRUST COMPANY LAW [§62 company. according to their respective priorities. no collusion on the part of that company is it averred. . sale. and as long as they did not do this. to saying. which was prior in right to the second. The Trust Company was a trustee under the first mortgage. if they had been parties to the suit otherwise than through the trustee. nor is it alleged that the com- pany. that the rights of bondholders under a prior mortgage cannot be affected by subsequent acts by parties under subordination to the prior mortgage and. The bondholders were represented by their trustee. there is an absence of any allegation in the bill that the second mortgage bondholders. all they could ask would be that the company trustee under the second mortgage be removed. so far as did or could represent the second mort- gage bondholders was unfaithful to its trust. the bill ] alleges that the foreclosure suit was a suit to foreclose both of the mortgages. It certainly could not be asked by them that the trustee under the former mortgage be removed or disqualified. There having been an admitted default on the first mortgage and the foreclosure proceedings having been properly instituted. There was demurrer to a bill to set aside the The court in affirming the judgment sustaining the ''As to the allegation in respect of the demurrer said: inconsistent positions of the Trust Company as a trustee under both of the mortgages. of course." This language amounts. if acts of these parties created an inconsistency they could not lay by and afterwards urge it to the detriment of those whose rights were paramount. as I understand it. and. At most. as is established by numerous decisions.

not disinterested. J. As this bill was tiled alter the sale. It is interesting t<> note that the court said that: all "The bond holders (not some of them. was it "In bringing to a sale the mortgaged property acts for the benefit of every bondholder his right to share in the proceeds of who may show sale. but of them J were repreheld that the fact that sented by their trustee. & D. The other way he is vested by others with a power inconsistent with the former grant of power. objections then made for the first time could not be urged to invalidate that sale. as in the cause. The question is of where the proceeds of the sale shall go tion not a ques- which concerns the Central Trust Company. because it is brought about by the trustee acquiring personally an inconsistent interest. Central Trust Co. or as trustee under the mortgage under foreclosure." Upon a trust parity of reasoning it is company holds some of is the bonds as collateral is 48 security. v. ltiy Fed 4GC. This ruling must have been made by Lurton C. equally It unavailing as to said: its - proceeding by foreclosure. It was 48. . (1908)." This question is slightly different from that where the inconsistency of position arises out of one being trustee as to conflicting interests. therefore. a practice followed in very many cited cases. Rv. It seems that his personal act would have disqualified him to carry out his former trust duty. as applicable to a case which came under "the practice in railroad mortgage bond cases to postpone the final complainant determination of validity all such questions" as related to the and amount of bonds held by each holder. Co.§62] CONFLICTING MORTHAGES 117 they must abide by the situation that had been created and under which they derived their rights. and. Cincinnati 11.

could be as well re- said that there could not' be the same trustee for a mainderman and der interest. that any clash will arise out of the conservation of the property. if instruments are drawn. on their face. § 63. and when it comes to distribution on sale. when having no personal interest. the practice. whether it represents one mortgage or all of them. whom it represents are not strictly conflicting according to legal construction of the instruments appointing Subordinate deeds concede. as stated above. is to postpone all questions for decision until after the sale If this could be ruled when a trustee's personal is made. a fortiori could it it be so thought. but I see no substantial objection to the practice.118 TRUST COMPANY LAW [§63 thought that no case was stated for intervention. no fraud or collusion being charged. teeship Though there is inconsistency in a trus- where conflicting interests are represented by one trustee. yet there are many practical considerations A trustee under mortgage-deeds of trust in its favor. It legatees given a charge on the remain- can never be anticipated. has well-defined duties and none of its powers are called into exercise. is submitting to a all court documentary evidence of the rights of parties claiming interests in the proceeds of sale. Trustees Under Conflicting Mortgages — Continued. prior rights and according that is to their tenor there is no It conflict in right not recognized in advance. except upon default and the rights of those it. for a trustee's duty could not be more or less stringent in this regard. I may say in concluding this section that no better stock exchange The New York . condemns the practice of a single trustee for prior and secondary mortgages. clearly interest is concerned.

80. Dillaway v. An action for the removal of a trustee is properly founded upon allegations that it has acted in bad faith in the prosecution of an action for the foreclosure of the mortgage and in a manner prejudicial to the bondholders. Y. removal. Gibson v. 141 \. BO. ' . which created an opportunity to be untrue t<« its trust. 54 N. 52. v. 359. 53. method of remov§ 64. by consenting to the subordination of the lien of the mortgage to certain expenditures and not permitting any bondholders to intervene in the foreclosure proceedings.(1914). 54. . American Loan v.! purpose. page 471. rather than a material objection to a trustee under a mortgage-deed <>\ trust can be given which refused to consider averments as to a trust company being vested with other powers. E. 217 Fed. V. 171 Mass. v. 58 Hun. E. ing a trustee is frequently provided in the trust instrument. 17 1 Mass. Union Trust Co. & Trust Co. Harrison Fidelity Trust Co. (1899). 51. especially as the trust agreement provided for a trustee's removal by a vote in writing of one-third in interest of the bondholders at a meeting called for that than a Massachusetts case. (1899)." The refusal of a trustee to comply with a judgment makes out a prima facie case for its removal. 54 Dillaway Boston Gas Light Co.) 443. 50. :> 1 \T . 359. 53 Acting as depositary for a bondholder's committee is not inconsistent with its duties as trustee and does not render it liable to 19. (1S05). See Appendix. (1890). when there was no averment of culpable negligence. Boston Gas Light Co.§64] REMOVAL IT' illustration of the objection to inconsistency of interest being a technical. Removal of Trustee. 326. Washington Oregon Corporation. 588. 50 A Such a provision must be followed before ri legal proceedings for removal are instituted. (N.

These boats were to be sold to contractors for specified prices and the boating of coal was to be accord- made were by plaintiff ing to printed regulations made a part of the contracts. Derivation and Need of Equipment 1 Trusts. In an opinion by Gibson C. instanced a contract built which prior to 1833. it was said: "By the regulations. . v. under possession the installments being paid. The idea of a car trust appears to have been suggested by an early case in Pennsylvania. taking on their return only such freight as would not cause interruptions in their regular trips. These vessels were for contractors to "boat coal" thereby in the Lehigh and Delaware canals at certain prices per ton. L Lehigh Coal & Nav. which were part of the contract. The to question before the court was whether. the contractor or "boatman. whereby boats and delivered under a form of printed contract. 232. Field (1844). 8 Watts & S.CHAPTER XII Car or Equipment Trusts § 65. J." had any title which could be levied on by his creditors. the persons who had the boat in charge were the company's servants acting under its control. Co. The company was to pay the tolls and the contractor was to take freight from no other quarter except whom was delivered.

as to which the writer has given his views in another work. without them. much greater than at present. Thus the ostensible as well as the actual in the company and the possession in its The attachment levied thereon and sale thereunder was held to confer no title to purchasers. 641. 3. Justice Field said: "Mining partnerships as distinct associations. Smelting Co. The necessity for protecting sales of equipment on credit was early recognized by legislation. S. Trust Estates as Business Companies. 2. 102 U."'' So railroads need car trust and equipment associations to supply the rolling stock to utilize the rails of steel or iron capital has laid on rights of way. indeed.§66] EQUIPMENT TRUSTS 121 as back loads. and the variant views of courts as to whether thereby rolling stock contracts amounted to absolute or conditional sales." This thought as to boats developed into "( ar Trust Associations." which began as unincorporated joint stock associations." By analogy they are found within the principles underlying mining partnerships. successful miningwould be attended with difficulties and embarrassments. Manufacturing concerns must have ready cash for the supplying of railroads with locomotives and cars. with different rights and liabilites attaching to their members from those attaching to memall bers of ordinary trading partnerships. To this end statutes have been enacted in nearly all of the states on the subject of com§ 66. the rolling stock they needed. exist in mining communities. 645. both general and mortgage were sought to be made clear. Kalm v. (1881). Protecting Legislation. Ed . ownership was servants. so voluntary associations or trusts sell organized to purchase and were on credit to the railroads. of which Mr. 26 L. and as to what were the rights of creditors.

any 5 after-acquired property clause in the mortgage to the contrary notwithstanding. 4 While this legislation is far it is from being uniform seen by decision that such legislation is considered apart from general statutes regard4 It was said there of a ing conditional sale contracts. though they only attaches to . It the general mortgage does not displace them. that: "The title to the equip- ment for. may be junior to it such interest as the mortgagor acquires and if he pur- chase property and give a mortgage for the purchase money. R. this is intended as generally they authorize conditional where there for purchase money. sale made under * I the Ohio act for the purchase and sale of railroad equipment. 12 Wall 362. A. 434.Acquired Property Clauses. 108 Fed. though. N. Metropolitan Trust Co. among the states. (1901). O. 135. Co. It was long ago settled Status of that mortgages as to property which passes to the mort- gagor subject to a lien thereon remains so subject. § 67. R. already subject to mortgages or other in point of time. C." * * remained in the vendors all until fully paid do not say precisely this result would be at- tained under sale contracts state statutes. 5.122 TRUST COMPANY LAW [§67 panies selling to railroads and street railways the rolling stock they should need providing for the recording of contracts of sale and constructive notice therefrom to subsequent creditors of the road. If that propliens. (1871). is retention of title as security Equipment Under After. presumptively. 48 C. Equipment Co. United States v. . In this case it was said : "A mortgage intended to cover after-acquired property can only attach itself to such property in the condition in which erty is it comes into the mortgagor's hands. 20 L. the deed which he receives and the mortgage 4. R. Ed. v. 013.

Co." there 6 7 In a case in the Sixth Circuit Court of Appeals. with obligations thereunder called "lease warrants. (1900).. in-: V. 47 C. 108 Fed. whether in the shape of a general mortgage or judgment. and that no such * thing was really contemplated. S. spect of such after-acquired property. Ed. I. S. 143. l. action * * The real trans- was a bargain and sale. 25 26 !. 1. Continental Trust Co.EQUIPMENT TR1 123 which he gives are regarded as one transaction." This ruling think it is fortified by much authority and in all I cannot seriously be disputed. § 68. it passed under the after-acquired property clause of the existing mortgage. or recognizance. Fosdick v. was a contract. Ed. Contracting Schall (1878). and no general lien impending over him. & Bldg. Safety of Investments Car Trusts. that for purposes investments in equipment or car trusts associations are safe. and in such cases a failure to register the mortgage for purIt does not come chase money makes no difference. yet 0. 99 l". can displace such mortgage for purchase money. v. purchasers and creditors. 235. intended for the protection of subsequent. subject to the lien of the vendor. the existing mortgages not being purchasers for value in resecurity for the purchase money. Myer 7. C. . Western Car Company (1880). very apparent that they need more of attenv. See. These laws are within the reason of registry laws. the title being retained as Being property susceptible of separate ownership and separate liens. 339. in form of a lease. not prior." and Judge Lurton spoke of it as follows "It is too obvious for discussion : that the arrangement under which the railroad company acquired the 10 locomotives in question was no ordinary letting of property for a fixed rental.. legal While it may it is be admitted. A. also.

to say nothing of being retaken and placed in proper custody. The security not only upon personal property. customarily deal quite liberally with equipment trusts. by sellers. The and may have been scattered through many is states.124 TRUST COMPANY LAW [§69 tion by trustees to protect the interests of investors. It may be said that the value of the securities depends upon divers con- The purchasing to its These may be enumerated as follows: (1) railroad company must be looked to as stock sold trust general solvency. be difficult to trace. Criticism of the Form and Security of Car Trusts. but the court. than where the security siderations. but ruinous sacrifice in its sale. (3) The duration of the and the depreciation that ensues upon use. 8 Francis Rawle spoke of this form of investVIII Reports American Bar Association 277-322. that it is its duty to look first to realizing the utmost for bondholders in a mortgage on the road itself. might not re- gard cars itself bound to assist the seller in retaking. is a railroad itself. Clauses for Reports to Trustees. 8. but then it is readily seen. In 1885. looking only to the interest of bondholders whom a receiver represents. which. And besides this in contracts authorizing cars not paid for to be retaken difficulty. It may be true that where railroads go into the hands of receivers. § 69. . (4) The probability that a road equipped for traffic in prosperous times in may throw back on the sellers what it may not need periods of depression. Mr. (2) The real value of the rolling is to be considered. but upon a class of personal property. the courts. there might be a great practical The right to retake might be freely acknowl- edged. if thrown back on sellers. would involve not only great expense in being cared for.

To keep track of such perishable property and see that 9. * is but a means to the desired end. as it enables them to secure it at once at a small present outlay and to use it in such a way that it can pay for itself out of its own earnings. The value to railroad companies of this new method of obtaining rolling stock is certainly very great. the Investment Banker and the Investor is this neglect of investigation and regular oversight. warning against carelessness in their execution and ad- vocacy of greater watchfulness by the trustees have appeared in reports by the "Committee on Railroad Bonds and Equipment Trusts" of the Investment Bankers' Association. In this report the committee well says: "The value of the collateral under any loan and the maintenance of the value of such collateral can be safeguarded to a certain extent by the terms of the indenture. but criticism of their form. One of these reports is included in the Appendix of this book. The greatest evil today in connection with the problem of Equipment Trusts. and of its loss of favor in then very recent times. He next remarks that: "There can be no doubt that car trusts can be so organized that they may be a perfectly safe form of investment. Appendix. * * * This. with proper care in their creation and administration. page 474." Since that time these securities have regained their popularity with investors. they should not again be so esteemed by the business world and regain their former popularity with investors.§69] REPORTS OF TRUSTEES 125 ment being formerly highly esteemed. . * * however. and there is no reason why." Investigation and regular oversight are greater burdens than trustees generally are willing to accept.

it was necessary Sec Appendix. That the § 70. making indebtedness for car The fact that claims that such a preference exists without legislative authority therefor. 217 Fed.126 TRUST COMPANY LAW lost or [§70 promises to replace require worn out cars are kept would It is more than ordinary diligence." that provide and certificates of fact to the trustee. is To seek further legislation along this but to follow to a logical conclusion the end in view. adequate protection to the holders of car trust securities. Moore v. One form which new legislation might take. line. the experts in the railroad business. could be provisions equipment a preference debt. have been vigorously pushed by learned counsel indicate that it is not a radical idea. Appreciating Committee have suggested "clauses to be incorporated in 10 Indentures Securing Equipment Trusts. unless 10. 177. a task for this. Another way to make these investments more secure and one that would not require detailed superfor reports vision by the trustee tion. page 485. Though the Circuit 11 Court of Appeals for the Ninth Circuit in the case cited held that debts for operating equipment could not be pref erred over prior mortgages. namely. 11. Donahoo (1914). is suggested in the following sec- Suggestion that Liens for Equipment be Given Priority by Legislative Enactment. . states are responsive to the necessity of making car trusts safe appears legality from legislation recognizing their and providing for recording and constructive notice therefrom. This is a compromise arrangement by which it is thought that regular oversight would be secured without the trust company having to make its own investigations.

in the same way that improvements attached to a mansion or a business place assists in the sale of a lot." Though it is rolling stock is in a sense personal property. If it is sold by vendor or mortgagee to satisfy his debt. by which vessels are kept operation take precedence over mortgages whether plain that statute could Maritime liens for supplies prior or subsequent.§70] EQUIPMENT TRUSTS 127 to enable the receiver to continue operation of the road. In addition to all of this. it is in change this. can be sold to best advantage with the sale of a railroad which is its owner or mortgagor. It helps in the general sale of the road at about its real worth. 802. and might be regarded as an improvement of real estate. and its collection and removal is attended with much difficulty and expense. such legislation would eliminate from foreclosures. 26 Cyc. . the market for purchasers is confined to a class. It. and without it he would have to expend money or suffer inits terruption in the traffic enjoyed along with good will. be used on a track. It a kind of personal property which only may enables the purchaser of its the railroad immediately to continue operation. indeed. A preference of this kind would work no injustice against prior general mortgagees. bondholders or stock12. Indeed there would then be no difference in the sale of a railroad under foreclosure and the sale of a farm or a city lot under the same procedure. is for the benefit of the mortgagee as preserving or bettering the res. 12 In the article cited it is said: "If the mortgage was prior. contests between bondholders and the sellers of rolling stock. the ordinary maritime lien aris- ing on contract being based on the necessities or maritime use of the vessel.

would lose its importance in the face of the right to foreclose upon the entire property with a first lien upon the assets for any balance due for the equipment.128 TRUST COMPANY LAW it [§70 would assist in the securing equipment upon liberal terms and less charges for interest. because the recovery of the cars in good or impaired condition. for States. The advantage of such legislation to trustees would be to relieve them from duties of detailed oversight. The theory in practical affairs is to unify proit. . the larger and more certain is the chance of such interest and dividends. If equipment cannot be obtained. in case of default. Any such legislation should be uniform throughout the holders. which they evidently prefer to avoid. Things having an intimate connection should be joined in remedies. and this should not be prevented because of any technical rules cedure instead of diversify of procedure. a railroad can earn no dividends nor interest. and the more reasonably it can be obtained.

St. & Eng. . 231. L37 X.. Bank v. of its A property. regard is thus summarized in Geyser-Marion Cold Min. A.. v. R. every case to ascertain whether or not a transfer ol stock requested is duly authorized by the former owner. 33 2. R. In General. in 1. but an additional check to prevent over-issue. L9 R. of this liability is reviewed and 45 I. I! C. experienced and properly equipped organizations reduces the risks of legal liability The obligation of a corporation in this and litigation. 378.. A. A. 53 "It is bound to use reasonable diligence L. 1 Stark (1901). R. notes. etc. Y. A.) 30 Am. C.CHAPTER XIII Transfer Agents and Registrars §71. 1 and to facilitate transfers at office. Co. therefore. 1076-1083. Anno. 712 The extent as L173-1179 (1913-E). Appointing transfer agents to certify and registrars are means a corporation adopts the issuance of shares of stock. 131. bonds. Forty-second Street. S. or fraudulent duplication. l X. (N. (18 Rep. 106 Fed. Fifth Ave. and. for the conserving this for its protection against fraud. or any falsification of evidence as to the truth of a certificate of a share of stock or registered bond which may fall into the hands corporation does of an innocent purchaser for value. or other written evidences of outstanding securities or obligations. 558. I. 467. 13 Am. markets distant of this from work its home Moreover. the delegation to responsible. in R. 684: Co. E.

I might add that in view of the usage among banks for those at the money centers of this country to be the correspondent banks of those elsewhere located and the right of the latter to sell to their customers. known to every business man." the customs and usages of trade are part and parcel of every mercantile contract. (Pa. and for every breach of this obligation it is legally liable to the parties make injured for the § 72. and to prevent those that are unauthorized. that maintain general business relaother. it known 3. Bank Kentucky Schuylkill Bank (1846). foreign and domestic. their correspondents. pre- tract among "As banks. the implied power of one bank to act as transfer agent for another bank." The opinion goes on to mention the existence of such relations between many Philadelphia banks and banks of other larly cities." The opinion speaks of this as a each tions with usage of business. would Eq.) 180. and simi- between New York banks and banks of other cities. as exchange. Cas. There was evidence submitted that to accept such an agency was "a usual and accustomed conbanks. 1 Pars. drafts. damage it thus inflicts. of upon v. is stringent vailing among all evidence of such a course being within the necessary implications of all bank charters.130 to TRUST COMPANY LAW [§72 these transfers that are so authorized. . so a course of uniform usage. never called in question by government. saying: "Such usages spring out of And: necessities and are the best evidence of them. whether it was within Agent." of Implied Power Bank to Act as Transfer 3 In an early Pennsylvania case a very interesting review is made to determine long in advance of the express conferring upon trust companies of the power to act as transfer agents. never repudiated by stockholders. in favor of a particular course of business.

When business of the country took on more and more a corporate aspect. justify the . but also the credit of the drawee bank. and especially all great movements had behind their promotion. have their evident limitations. To have exchange >n a correspondent bank refused payment not only would injuriously affect the It was drawer. fer Agencies Not Sufficient for Business Necessities. indeed. that they should have the opportunity to prove the regularity of their securities through expressly authorized financial institutions of known responsibility. The transition from reasoning of implied power to the conferring of express power to trust companies or other corporations authorizing them to become transfer agents and registrars for other corporations was easy and natural. furtherance and achievement. and to its stock or bondholders. corporate agencies.§73) TRANSFER AGEN ! i -^ J seem well within the implied power of the banks upon which the exchange is drawn. that the drawers of such bills should satisfy them as to strict regularity in their stock issues. while properly held to be within implied power and of salutary effect. to the corporation represented. be like the reputation of Caesar's wife above suspicion. assumed to the investing public. Though individuals may should not be committed to tions act as transfer agents and registrars. there are sufficient reasons why these duties obligaimportant The them. Express Power of Trust Companies. Implied Power in Banks to Create Trans§ 73. it was but a safeguarding of the public as the investor in these agencies. that the < should. The arrangements between banks of which I have just spoken. banks such all of credit necessary. as far as possible.

Darst (1014). are examples of attempts by the police power in the direction of assuring the proper issuance of securities. though many corporations have not resorted to this means of accrediting Possibility their securities. there might arise against a corporation failing to resort to a presumptively disinterested agency for proof of the fact that it has not by fraud. 210 Fed. (1014). Wm. . 23?. § 74.132 TRUST COMPANY LAW [§74 confinement of these functions to corporations that are subject to departmental supervision. this does 4. Agey. Oct." principally ing as transfer agent for another corporation. v. 218 Fed. Compton Co. Alabama & X. Trans. 230 Fed. Turner. TIall v. etc. the point of a trust company under conferred power acttrict courts. Oct. It is true that.. 386. 537 P. was reversed by the United States Supreme Court/' Transfer Agent Defined. Oct. (No. 430 and 440. 88 R. Ad- verse ruling as to their constitutionality. 438. police so. While I am on § 75. which would lead a prudent investor to investigate for himself. Geiger-Jones Co. E. in federal dis- upon the ground that they violate the federal commerce clause. Term. (No. O. (No. 1010). Term. These laws were sus4 tained by the only state authorities yet appearing.raeey v. 1010). 292. State v. v. 413. Geiger-Jones Co. or inadvert- ance or mistake exceeded its power in so vital a matter. — . Term. 210 Fed. Co. What are known as "Blue Sky" laws. v. it appears to me to be well within the powers of the it state to require that they should do As is. 60 So. enacted in several of the states. S. 0. ^fcrrick v. of Compelling Corporations Their Securities Through Independto Authenticate ent Sources.. Halsey & Co. Dovle (1914). and Caldwell v. an inference. 5. Allen (1014). Sioux Falls Stork Yards Co. Fla. C). services is The value of these negligible unless is financial standing ities performed by those whose commensurate with the responsibil- assumed. 482. Ex parte Tavlor 726 (N. . 1010). 173.

) 834. back of the purported share there is the duty to ascertain whether it is regular. so we may get from the usages of law preceding such conferring of power the meaning" of terms employed therein. if these are incomplete. Standard ( < lil L. where I find a transfer agency spoken of as follows: "What is a transfer agency? It is a very harmless thing It amounts to nothing more than the witnessing of the conveyance by one person to another of personal property. its judgment must or not allow it to be transferred to another. however. A. If. Thus I refer again to Bank of Kentucky v. on the surrender - . Ann Cas. If only it saw to the exchanging of one share of stock for a purported share. there would be little reason for its existence. S. 34 . 1..". S. which has no common law. supra. This would involve a running back of the present alleged title to the purported share to its source. S. X. :." This strikes me as quite an inadequate description of what might be the full measure of the responsibility resting on a statutory transfer agency. This is a very simple business. (1911). Co v. U. viz stock of an incorporated company: And in this case also to furnishing the purchaser a certificate of ownership of such stock.. just as \\ [ndeed e get mon law 7 from the common law the meaning of c< >m terms in the legislation of our federal governitself ment.. of the title as shown by the agent's records or If it allows the other means. from the abstract. R. 1912 I > U. 221 734. transfer this should be deemed equivalent to a represen- . involving little or no risk or hazard. requiring nothing but ordinary care and fidelity in its performance. Schuylkill Bank. so to speak. I.§74] TRANSFER AGENTS 133 not preclude looking for definition elsewhere. : of a previous certificate of like character held by the seller. 619. 7 \ a\.

See. 89 Ala. has been expressly held that a purchaser of certificates of stock need not look back of the It last registry of transfer. but really the record owner of a validly authorized share of stock in the corporation professing to have issued it. not only apparently. B. . 8 not forged. 10. Machinists' Nat'l Bank v. In re Bahia & S. In addition to all this a transfer agency ordinarily should see that the stock proposed to be transferred to another is is represented by the true owner and his name case." It is easily to be thought that this result could not be avoided by a corporation using a trust company for its transfer agent and the latter ought to be responsible 9 to its employer. R. and debiting securities issued and outstanding. Montgomery. F. Winter v. Defined. Thus it was held in an English where the stock of a registered holder in a joint stock company was left with her broker and he forged her name to the transfer thereof. The Terms "Registrar" and "Registered" A "registrar" records The object is transfers by crediting the total authorized issue. also.134 TRUST COMPANY LAW it [§76 tation by that the new owner is. 10 § 76. and any separate proofs and (18G8). 345. issuance of a tered certificate to the supposed purchasers company liable to the former holder and It it new regismade the was made to was further held that the giving of the new certificate amounted to "a declaration by the company to all the world that the person in whose name the certificate is made out * * * restore her to the register. the old certificate 8. L. G. to prevent to safeguard against a total debit in excess of the total credit or in other an over-issue. 126 Mass. Co. (1889). words The transfer agent makes the certificate. Field (1879). is name a shareholder in the company. 7 So. 9. transfer and issues the new The new certifi- cate. 773. 584. 544. 3 Q. Co.

Y. v. 87 N. 55 N. Clarkson Home v. New York & New Haven R. 36 Atl. The New York Appellate Division ment) in (First Depart- speaking of registering a bond issue said: "It was evidently the intention to assimilate the right of transfer and retransfer of the bonds when effect. 348. 500. Co. Eq. I think. and New York & New Haven Railroad Co.. are no objections appear. in- volving it and innocent purchasers of shares 11 in extensive and costly litigation. as distinguished from an unregistered bond that passes from hand to hand without formal transfer. Eenwell v. registered to the transfer of shares of stock in an in- corporated company. R. . etc. Y. J. so that the of the bonds loss. 491. when registered should be protected 12 owner from theft or embezzlement. A "registered" stock is one to which the services of a "registrar" have been applied. Y. 668. 260. 30. 13. called into use after the SchuyRobert Schuyler as transfer agent of the New York & New Haven Railroad issued a large number of certificates to his own brokerage firm and others ler frauds. 92 N. R.§76] REGISTRAR 135 evidences of right to transfer that sent to the registrar. Schuyler (1865). Y." The term Jersey case: is 13 registered bond. (1856). was thus defined in a New "A 11. but the term "registered bond" means a bond assimilated to the rights of transfer of stock. App. 13 N. Div. Supp. These services were in excess of the authorized capital of the railroad. the Regis- trar thereupon signs the new certificate. 12. and the of this ar- rangement was to place registered bonds and shares of stock of a corporation upon a similar footing as to the requisites necessary for a transfer. registered bond is one which a simple certifi- See Mechanics' Bank v. Major. of Citv of Newark (1897). Chesapeake & O. (1904). If may accompany it. 34 N.

by the terms government.. is paid directly to the registered creditor. with a proper in- dorsement on the bond certificate. and the danger of by robbery or fire is entirely removed. N. 137 . if it itself. . 331. Y. 712. R. it of the bond or certificate of indebtedness. (189:. or. on the registhe days when. 33 N. 231 Fifth Avenue Bank v." This case is also authority for the rule that the proper remedy to enforce the conversion of a "convertible coupon bond" into a "registered bond" is specific performance.: 136 TRUST COMPANY LAW [§77 cate of indebtedness. ter of the —municipal or private—as the On entered on the books of the regis- if it be a government bond. at each time that the interest loss Definition and Effect of "Countersign§ 77. by cash in hand. to authenticate by an 14. by long-settled course of practice. Rep." The term "countersigning" as applied to certificates of stock has been defined by the 14 New York Court to sign of Appeals as follows is "To countersign an instrument what has already been signed by a superior. in favor of a particular individual. or. if he so demands. or by the issue of a lies in be a government indebtedness. A. new The peculiar value of this class of securities that it the fact is not necessary to produce them to the debtor is due. Forty-second St. with interest at days named. to his order — drawn the books of the debtor corporation. the interest falls due. payable at a day named. E. These bonds or certificates of indebtedness are not negotiable. 33 Am. Co. etc. usually by check and sent by mail. 19 L. ing.).. The name of the payee is corporation debtor tered owner. the payment is made by check to the order of the creditor. St. 378. and can be transferred only by an entry on without presentation of the bond. but.

P. and not the countersigning agent) and that every essential requirement of the law and of the by-laws had been performed to make it the binding act of the company. 62 Atl. if it is willing to give such certificates. 213 Pa. provides shall be entitled to that any stockholder of a corporation on the books. and it denotes the com- plete execution of the paper. ." Right of Corporation to place Restrictions § 78. Cas. 916. 'which receive a certificate of the his credit number of shares standing to certificate shall be signed by the president or vice-president or other officer designated by the board of directors. however. St. v.: §78] TRUST COMPANY LAW 137 additional signature. 258. The Court said 'The Act of June 24th. Dollar Savings Fund and Trust Co. countersigned by the treasurer. upon Transfer and Issue of its Stock Incident to Services of a Countersigning Agent. (1906). does not prevent the corporation. A Pennsylvania opinion 15 considered the effect of statutory requirements relating to signatures upon certificates of stock and im- plied rights of the corporation to protect these signatures. 15. 1895. and sealed with the common seal of the corporation. 307. Co. L. and if a party who receives a certificate signed act of assembly is. from taking such further precautions as it sees fit to provide againsl the simulation of such signatures. 5 Am." said The was effect of countersigning the Court in this case to declare "in the (the stock certificate in question) most formal manner that it had been properly executed by the defendant (in this case the principal.' This. and usually has reference to the signature of a subordinate in addition to that of his su perior by way of authentication of the execution of the it writing to which is affixed. given express notice & Pittsburgh Plate Glass Eng. 24*. Anno. at and sealed as provided by the the same time.

if the certificate was in fact fraudulently or improperly issued. . and represents itself as competent perform that work. v. Registrars. 213 Pa. 62 Atl." Liability of § 79. Cas. Anno. As holding itself out for such pur- pose and for a consideration of reward for its services it might place its principal or customer in some attitude of responsibility to one misled by its errors. That a trust company in business as a transfer agent. such party cannot then pay money for such stock and claim that the that the certificate company is in equity estopped to deny the validity of the certificate. its 16. 248. & Eng.138 TRUST COMPANY LAW is [§79 not good and will not be recognized as a certificate until it has another signature. or "registrar of transfers" may involve liability of one of corporate customers. The phrase It is "transfer agent" seems a mis- rather is company an agent. 916. Agents. leading. and bound to recognize the party as a stockholder or to pay him damages. in Companies for Acts There are a number of their of cases. in a recent case. Co. which it sets itself up to perform as the agent of whom- soever applies to it. bethese. but at the agent. An inquiry in regard to not deemed of importance here. Dollar Savings (1906). however. it same time just as with any other or cuslittle would incur a liability to its principal tomer. to really It is nomen generalissimum. 307. Pittsburgh Plate Glass Am. cause my purpose is to treat of agency of this kind as of and in itself the business of an independent company. 5 Fund & Trust Co. which the liability of corporations for the acts or omissions of their is own transfer agents. by way of 10 In this case there was a argument. appears. no more an agent than any one The else is merely open for employment in a par- ticular kind of work. etc. registrars and the like have been considered. frauds or mistakes.

the company would doubtless be bound to recognize its validity. Y. the result would be the same. and he had signed it without authority. Y. and above the seal. signed by the president and secretary. Supp. the acts of the agent within the scope of his authority would . 3S Misc. The court. Speaking of the point of whether a foreign corporation maintaining a transfer agent in the state has an office therein for the transaction of business. and issued it fraudulently.) 446. where a clerk had access to it. the Company. if that were the case. or it might have been an ordinary salaried employee designated as the transfer agent. (N. Singer v. it was said: "There is no magic in the fact that the agent employed is (another) corporation it might have been an individual. Carr. 77 17. and certainly. ." name said : of Mr." A New York case 17 is seemingly more explicit on this point. and sealed and left with Carr. 1000. registrar of transfers. be the acts of the principal. Under the signatures of the president and secretary. Company of PittsThe clerk forged the proper officer of the Union Trust in ruling in defendant's favor." volved. or if (the clerk) had obtained Carr's genuine signature. was the following: was properly and it was left "This certificate will not be valid unless countersigned by the Union Trust burgh. Knickerbocker Trust Co. though the precise question of civil liability for the acts of an agent was not involved. N.§79] suit against the LIABILITY FOR AGENTS 139 Pittsburgh Plate Glass It Company for negligent issue of a stock certificate. People ex ret. viz : On the precise point in- whether the employing of another corporais tion as a transfer agent constituted the transaction of business within the state subsequent decision the other (1902). "If the certificate had been signed by the president and secretary.

Y. (1912). 165 N. 20. of the This agency was created to enable an English company to sell a limited number of its shares in this country. 153. dissenting. Misc. 19. The liability of a trust company as transfer agent where there was a forged assignment was declared in a New York case. R. A. Central Trust Co. holds a trust company. which was a party to terminating the affairs of one corporation by exchanging its certificates for those in a new company. was said as to the rights of the certificate holder against new company. Equitable Trust Co. 53 L. Y. (1900). Wadsworth v. but liability is declared against the trust company for the unauthorized transfer and this embraces the right of the new holders to be the old or the recognized. Guaranty Trust Co. 737. the trust com- pany to receive the old certificates holders received stock in and to see that the Nothing the new company. App. Y. Y. as transfer agent. . Gray J. Weichers v. though it appears that it gives the corporation a 19 domicile in the foreign state "so far as the registry and transfer of shares therein are concerned. McClure v. Liability of Trust Companies as Transfer Agents. In a later New York Court of Appeals Case 21 an opinion concurred in by six of the seven members court. Y. 89 of this book. (1894). As the 'The defendent (trust commajority opinion says: pany) was the central figure in a plan to make shares issued by an English corporation readily marketable in this country. 777. 78 18. 108. 21. Supp. 576. For that purpose it issued the certificates Althause v.140 TRUST COMPANY LAW 18 [§80 way. 58 N. Supp. 842." § 80.) 181. 153 N. (1912). Central Trust Co. SO Hun. 138 N. infra. 945. Div. (N. E. 20 This was an action by the certificate holder directly against the trust company. to an exceedingly strict liability. 137 N. See Sec.

Italics supplied. would result in the transfer of marketable shares.§801 Liability of transfef agents 141 of transfer and accepted the position of agent to transfer certificates in consideration of an annual salary. But what says the Court as to this? "Under these circumstances the law imputed to the defendant'-. and invited the confidence of the public. and that it also contained a covenant on the part of the transferee 'to accept and take the said shares " subject to the conditions aforesaid.which it knew purchasers would expect. The position which it occupied and the circumstances surrounding it when it contracted with the plaintiff cast upon it the duty of it must itself exercising due care in discharging the trust relation which it had assumed. The in acts of certifying. transferrer held shares 'immediately before the execution' thereof. It held out the shares in its possession for sale as marketable.' Here the question naturally is suggested whether proposed purchasers were under obligation to inquire back of the offer by the trust company to transfer. Its position was one of trust. that the shares were issued by the English cornpan v subject in express terms to its articles of association and regulations that the deed of transfer was likewise subject to the several conditions on which the . under such circumstances. and expressly agreed to make delivery upon demand.the duty of 22. and not It held the shares and the deed of its mere shadow. the purchaser may reasonably expect to receive in essence and substance. transfer in trust for purchasers. but the plaintiff did not know. offering for sale and selling were substance an assertion to that effect. It was to deliver something. . It knew. What a trust company sells even for a third person. and which of necessity have expected.

where a trust company became the trustee under a trust mortgage which provided that the trustee should not be 23." of mingling in this case of the specific duty of a transfer agency with that of the agency holding itself out as a seller of the stock. as well as a complete and effective machinery. Thus he said: "I not only doubt the it is soundness of the doctrine upon which pute to the trust company a sought to im- liability akin to that which it but I doubt its wisdom. Y." This case has been cited in later to the proposition that the trust New York 2 ' cases company was liable as and therefore the agent of an undisclosed principal. 380. It is sought to impute to this trust company duties and liabilities which its conduct did not suggest and which were not within the strict terms of its undertaking. (1904). Tschetinian v. but the dissenting There is much opinion shows that the dissenting judge understood the ruling as defining the responsibility of a transfer agent pure and simple. Div. sponsibility for the safety of values confided to them.142 TRUST COMPANY LAW [§80 inquiring to see whether there was anything behind the conditions appearing on the face of the papers in its possession. before it undertook to place them on the market under the sanction of its name and the confidence invited by its Its position and superior knowledge put it standing. are de- manded. The vendor would be under as a trust company is one of a number of like institutions. City Trust Co. which afford the community safe and convenient agencies in financial transactions of magnitude where re. which would make the shares unmarketable. 97 N. . App. upon inquiry and the law charges it with knowing whatever proper inquiry at the proper place would have disclosed.

Liability as Transfer Agent Continued. 25. 584." In this case there fer agency. 115 N. without so far as appears a single adjudication extending the liability to even the implied guaranty of the securities whose mere identity they have authenticated. as a transfer agency or a registrar. Div. the fairly re- court said: "Prospective purchasers * * * were ferred to the mortgage." the mortgagors. or at least something resembling a transthat of a registrar. Dunham Supp (190S) v. affirmed by the New Pork 1 -" 4 Court of Appeals. Y. Appellate Division. It seems to me a little difficult to reconcile Wiechers v. It etc.'' 24. Besides the sales were by said: was further it "In view of the length of time during which trustees of has been the custom of bond issues to act in that capacity for a com- paratively trifling consideration limiting their liability to their own acts of negligence. (1906). Y.§81] ' LIABILITY OF TRANSFER AGENTS 143 responsible for any default by the mortgagor and each of the bonds secured thereby were merely indorsed by the trustee as being one of a series mentioned in tin- mortgage referred to by the bonds. 642. it would be unfair in the cir- cumstances detailed in the complaint to impose so serious a burden upon the office assumed by the defendant in the financial transaction in question. supra with a later decision by the New York Supreme Court. 19:$ N. §81. be fairly supposed to represent that stock or bonds are marketable. City Trust Co. without opinion. 101 N. but both it and is it the Central Trust case to which refers inculcate the doctrine. Y. . Central Trust Co. and McClure v. that to the extent a trust company may. on their face. to that extent it should be held responsible. Central Trust Co. App.

The judgment was affirmed in the Court of Errors. as : Denio 118) affirmed (See. In the meantime the stock was sold at a loss. but the them no agent of the plaintiffs and owed as:ent of the defendant to whom alone it was answerable for any neglect in discharge of the agency. 459 and 1 Morawetz Corp. though they preceded both of them. Y. 115. Albany errors. transfer agent. 7 N. Probably the essential reason of the decisions in those cases rested on the express agreements on the part of the But.) the resident transfer agent of a foreign The corporation unjustly refused a transfer. and yet both of them concerned transfer agents of foreign corporations. and the plainThe court held that the tiffs brought action on the case. and (2 lie against the defendant.144 TRUST COMPANY LAW [§81 In the Dunham case there was a suit against a trust company as transfer agent for refusing to transfer stock it of a foreign corporation for the reason that was wait- ing a ruling by the State Comptroller whether or not it was subject to taxation. Y. Manhatten Co. Judge Gray. saying: "In Denny v. the chancellor and two of the senators delivering 'written opinions in favor of affirming the judgment of the Supreme Court upon the ground upon which its decision was made' (5 Den. regarded the judg- .) In Colvin v. action did not it was not the duty. 639.' City. sued. Manhatten Co. who dissented in the McClure case. For this loss the the trust company was court held relying on a former decision that the action did not lie. (2 Den. 129) the The question must be deemed at rest in this Court says state by the decision in Denny v. in the court for the correction of Montgomery County Bank v.) 537 citing Denny's Case supra)" Neither in the Wiechers nor the McClure case were the cases above cited referred to. Holbrook (2 N. as I have shown. (2nd ed. too.

and not against a trust theless the rule there company empowered by Neverseemed. ~f>. case. § 82. it becomes apparent.§82] LIABILITY OF TRANSFEH AGENTS 145 ment against the shareholder. inadequately portray the responsibility of a transin Dunham fer agent. 537. to be conceded that could the act of the transfer agent have been deemed a misfeasance. even should the corporation not be held. that the words I have quoted from Bank of Kentucky v. however. announced is pany as a transfer agent in the Dunham however. as an agent. which New was a transfer agent according to the usage described in Bank of Kentucky v. as I have stated supra. It statute to carry on business as a transfer agent. in the Dunham case that liable to intimates that the trust company would not be the corporation for any loss that might be recovered by an action against it. The Denny supra. applied to such a comcase. Wharton's Agency." But it would not seem unjust to revive it against a corporation with express powers under statute to carry on a par- ticular business. it would have been held liable. however. The old distinction between acts of mis2 feasance and nonfeasance on the part of an agent has been spoken of as the "now exploded distinction. and not a mere nonfeasance. . was against a bank in York. — Whether which its a trust company as a transfer agent may incur a direct liability to the shareholder of a corporation for acts as transfer agent appears to me to be in- volved in doubt. Schuylkill Bank supra. Schuylkill Bank. Sec. trust company as against it as a trans a fer agent subject directly to an action brought by There is nothing. Liability as Transfer Agent Concluded. If it would be. for acts of nonfeasance as well.

§ 83. affect.146 TRUST COMPANY LAW It [§83 does not seem to itself me so very clear that such a corporation holding to carry out to the world as competent on the business of a transfer agency should be regarded as the mere agent of the corporation that employs it. except against one. especially by a for- eign corporation. legally cancelled. has stated that in his opinion the duties and liability of a registrar do not differ in any marked degree from those of a transfer agent. involves a duty "under the sanction of its name and the a justification of the confidence invited by its standing" — law's policy. of the in judicial decision. Proceedings. acceptance of the Obviously. just as is stated in the McClure case. Furthermore as its employment. courts will impose on an implied obligation to them along with the express it. What. The policy of the law that vests it with such powers is to make it responsible to whomsoever its acts. 1900. Bow27 Maryland Trust Company. the registrar cer- Address. 27. Henry J. . that "in guarding against an over-issue of stock. distinction there may be between the liability of a registrar of stock and the liability of a transfer agent has not yet appeared doin. it becomes necessary for the registrar to scrutinize all transfers since the issue of a certificate. by fee agrees to discharge. any. for the same number of shares This duty the office and would necessarily result in its an over-issue. at favored centers will be judicially noticed to be for the benefit of shareholders fully as much it as for the corporation itself. if registrar impliedly. American Banking Association. Its selection as such an agency. obligation to if Liability as "Registrar" of Stock. whether of omission or commission.

In other words.§83] LIABILITY OF REGISTRAR 147 tifies the issuance of a certificate. if. thereby placing upon it the last and highest indicia of validity. of a new certificate for the same number of shares in the shares. and loss resi to the principal fulfill therefrom. The counter-signature as Transfer Address on "The Protection of Trust Companies Acting Agents and Registrars" before the Trusl Companj S© American Bankers' Association. the registrar has failed to the purpose of its appointment. 190. number of name of the transferee of the cancelled certificate. as a fact. no stock. . Thereupon the registrar signs the new fer. at least. loss enures to a stockholder whose property rights have been wrongfully divested thereby. the new certificate represents 28. 11. that opinion probably According to the practice in New the York. if. certificate without requiring other evidence of the correctness of the trans- Now. Sept. either by the issuing corporation or by its transfer agent. the transfer agent has been in- duced to cancel the old certificate and to issue the new by a forged or otherwise invalid transfer. by such action. the signature of the latter in acceptance and approval of the evidences of the transfer being essential to the transfer and being the last act in consummation of the transaction by which the is stockholder injured?" This responsibility of a registrar was expressed by Mr. cannot such stockholder recover from the registrar. Rollins as follows 28 "While the officers of some companies which act a : - registrars undoubtedly believe that the responsibilities connected with the discharge of the not generally held. a registrar seldom requires more than exhibition of a cancelled certificate of stock for a given and the presentation therewith. office are not as great is as are those of a transfer agent. Jordan J. the stock di >es not follow the new certificate.-).

The foregoing definitions and cases show the extent of the liability assumed as dependent upon acting as "a transfer agent" a "registrar of transfers.. therefore. would. may. ." § 84. so far as such liability exists. in such case be false and might be held to constitute grounds for a suit for damages. This contract." trust company must use these terms with discrimina- A tion or it will assume 29 responsibilities not contemplated. Greene of New York City. in such a way as to permit recovery by the agent against the principal. however.148 TRUST COMPANY LAW [§84 of the registrar. it is submitted. fix the liability of the agent to the corporation. in effect." The public. using one which means less.' On its face this means merely that the transaction has been noted on the books. A magazine article speaks of some of these terms and : fearing the obligations they imply. certifies to the public that the certificate upon which it appears does not represent an over-issue. where the agent has been compelled to make payment with respect to an un20. and guarantees nothing as to the signatures of the corporation officials. 10 Case and Comment (1003) 73. and in this regard we probably cannot do better than follow the English example. to which they are not parties. and. i. which. Importance of Terms Used by Trust Company in Describing its Capacity — Contracts in Limitation of Liability. advises that "The most obvious remedy is to change the vital word. cannot be directly affected by the terms of the agreement between the corporation and the agent. and adopt the word 'entered. of a transfer agent and registrar to the to transferors and transferees of stock." a "registrar" or a "countersigning agent. in the absence of gross negligence or fraud. by Charles A. liability e.

fer agent or registrar's liability to its principal without a special clause in the contract to that effect. or genuineness of any indorsecertification of stock. Case and Comment (1903) 73. A reasonable provision in such a contract would be the terms of the fer agents. caution against excessive it is at least a proper pre- liability. on the part of the agent. as to the propriety. This statute Vermont statute provides that the liability of a transfer agent shall be "only to act in good faith and with reasonable care and which are in excess of the amount authorized to be issued by the issuing corporation or to transfer any securities to which the transferee is not entitled. or any doubt shall exist. or otherwise. 1915). on the liability of trans(Chap." "The agent assumes no ment on responsibility or liability for the regularity. title. legality. A agent in 10 far more radical provision for protection of the is mentioned by Charles A. whether of prior in- dorsement. Greene of New York. He says that "The best method hit upon for protecting the agent in such case is by way of special clauses in the contract of agency. or otherwise of the proposed transfers. then and in such case the or any matter connected therewith. or otherwise." He then quotes the following as being clauses of this nature "In case any question shall arise. where the agent has been guilty of fraud or gross negligence." This may or may not be the true measure of a transskill so as not to register any securities .J : §84 I i \l [TATION OF I. 150 Acts of Vermont.iai. except. In the absence of decisions in point. agent reserves the right to refer such questions to your company for instructions. as stated. legality. or for the .ii 149 authorized or illegal transfer. regu- larity.

validity. matter. legality. p. or liability by reason of. any unauthorized issue of stock. nor shall it be so responsible for. or by any party in a representative capacity. for the agent has been held liable on an it must bring an action against its principal for indemnity and is put to the delay of litigation and the possibility of having an uncollectible implied obligation to the public. 209-210). 1915. nor for the regularity. company for transfer holder hereof and his repre- Precautionary Requirements and Rules as . A more recent suggestion is made by F. however. the validity. Neither does the agent assume any responsibility for. transfer and registration hereof. or regularity of the stock c< now or hereafter issued by your impany." The clause in an agency contract if is but an indirect protection. officer. nor shall it be assumed to guarantee. or other person or persons. or any assignment or transfer thereof. or agent. or propriety of any instru- ment of transfer or of title." § 85. represent.to be signed by or on behalf of any stockholders. that only stock of responsible concerns are dealt in to any great extent and the risk of mistake and consequent liability is in direct ratio to the number of transfers. it As a practical has been pointed out. claim against an insolvent corporation. Winchester Dennio (Trust Companies Magazine for September. if acl ing in good faith and with reasonable care. or be in anywise responsible for. He all proposes that the following prostock certificates: vision be inserted in 'This certificate is not valid until countersigned and registered by the agents of the and registration and the sentatives and assigns by the acceptance hereof agree that the said agents shall have no liability to them in connection with the issue.150 TRUST COMPANY LAW [§85 signatures purporting.

500. the sub-agent. 31 This appendix of this book together with general precautionary rules and suggestions for the issue and transfer of stock. and ordinary care of a secondary agent. against Improper Transfers. Cas. page 180. agent is The liability of an incorporated transfer not affected by the fact that duties are performed by employees who are themselves agents of the agency. it became. that the contract for this agency being made by the president and directors of an incorporated bank. Several transfer agents and their counsel after careful consider- made a report in 1912 of proper precautionary requirements report preceding transfers by executors. § 86. and that under such cumstances the bank is no farther responsible for his acts than arises from the general obligation of every principal agent to act with in the selection 31. Compliance with these set forth in the rules affords protection to transfer agents. from a necessity. Argument on this point was thus disposed of in the Kentucky Bank Case: 32 "First. 239. as well as to security holders and the corporations represented. The principle on good faith Appendix. Kq. 1 Pars. (Pa. guardians is and tenants. 32. v.§86] LIABILITY 151 Protection ation. equally known to both parties. Liability as Affected by Sub-Agency of Employees. requisite to its of sub-agents in Schuylkill execution. life ad- ministrators. Bank of Kentucky Schuylkill Bank (1846). it is contended. so chosen by that the frauds charged in the corporation with the assent and approbation of the complainants that all bill were cir- perpetrated by him without the connivance of the Presi- dent or Director of the bank. employ the assistance That the cashier of the Bank was .) . trustees.

such as the contract creating this agency is shown to have been. v. but of the corporation lawfully empowered to carry the contracts of the corporation into execution. Anno. cannot with plaintiff's contention that Trust Company of Pittsburgh.\:2 TRUST COMPANY LAW [§87 which it is this position rests. The Union Dollar Savings Fund & Trust Co." Printing of Fiduciary's Name on Instruments Does not Constitute Signature until Blank for Signature of Officer is Filled. is in no sense no relevancy to an agency The cashier of the word a sub-agent officer. 5 Am. Pittsburgh Plate Glass Co. Carr. under the orders into carrying while bank. 248. Cas. 213 Pa.' with a blank for the signature of the printed in the forms name. if he has used reasonable diligence in his choice as to the skill and ability of the it sub-agent. as the directors are lawfully authorized to make them. St. name of the company acting is as registrar. when acting within the sphere of their authority derived from the corporation. 33. in such a case. For convenience the § 87. 307. of a of the directors. It was alleged that the signature of James S. has like the present. 62 Atl. . indisputable as is this principle. a broker or an auctioneer. (1906). was forged. said: fall in "We the. 916. an officer of the countersigning trust company. In the course of its opinion the Court. execution. is the familiar one. as for example. that when usual and necessary for a principal agent to employ a sub-agent. practice is generally printed upon stock regularity and safety of this 33 The upheld in a case wherein a corporation was sued for negligent issue of a stock certificate. a lawful contract. transfer or countersigning agent certificates and bonds. He is a statute not of the directory. the principal agent will not ordinarily be responsible for the negligence or misconduct of the sub-agent. & Eng. But. to transact the business. of the board of directors.

and extracts to be taken therefrom by any person entitled by law to inspect the same. Sections 32 and 33 of the Stock Corporation Law of New York were frequently applied to secure lists of stockholders agents.§86] [NSPECTION OFBOOKS 153 signature by the trust company withtake it that the necessity out having the blank filled. Chapter 127. for the signature of some officer is well known in such cases. . or to exhibit or allow the same to be inspected." liability -is provided by Sec. officer. agent or employer of any Criminal * * * corporation or joint-stock association who: having the custody or control of its books. and their addresses from the transfer Compliance with the law was often resisted be- cause the motive of the application was unfriendly to the principal corporation or because the list was desired 33 The amendment '* provides for advertising purposes. 665 of the New York Penal Code. in the hands of transfer agents. or take extracts thereform. and plaintiff certainly never looked upon the Carr proper officer. wherein it is made a misdemeanor for "A director." Right of mandamus to enforce inspection of books and papers 3&14. Before amendment in § 88. or any other corporation or has aided or abetted any person in procuring any stock list for any such person." Inspection of Books of Transfer AgentsMandamus and Penalties. that : "It shall be a defense to this section that the any action for penalties under person suing therefor has within two years sold or offered for sale any list of stockholders of such corporation. where the Laws of 1916. 1916. willfully re- fuses or neglects to make any proper entry in the stock book of such corporation as required by law. is a We signature as surplusage.

N. Supp. Y.t.) 282. Y. 36. 842. Y. Supp. Guaranty Trust Co. Knickerbocker Trust Co. 37. 40 Misc. (1912). registrar) contain similar information. Supp. "I have He said: (p. Supp. 446. Div. v. 138 38. 35.) (190. Div. Y." :. lied. 137 N." 38 In this case the Judge would include registrars within the same rules. 104 737. 181. (11)02). (N. 35 was denied by the The :iC dissenting Judge re- upon an in earlier case.) this subject of the had in my remarks upon I books. but am of opinion that if the books kept by the other trust company (Atlantic Trust Company.T). 38 Misc. 945. Wadsworth Equitable Trust Co. v.' but where the foreign corporation relief merely has a transfer agent. 153 N. (1905). App. also denied relief because the maintenance tion "of a transfer office in by a corpora- New York City was for the convenience of stockholders and action of business' 37 facilitated the sale of its stock. 77 N. Y. 451. Corporation Trust Co. they come within the same category. Montreal Copper Co. 1000. 928. but did not constitute 'doing business' or the 'trans- within the meaning of the statute. N. Y. in part. App. 78 Misc. (N. this majority in a lower court. Althouse Miles v. Singer v. an action to recover the $250. particular reference to the Knickerbocker Trust Company (transfer agent). 81 N. People ex rcl.154 TRUST COMPANY LAW [§88 office in is principal corporation has some other business the state or is otherwise doing business therein 54 clear and unquestioned. Y. . A recent decision of the Appellate Division (First Department). (1912). 974. 486." The penalty cannot be avoided because the books demanded do not contain "every particular item required by the statute. Y. Supp. Y. 93 Tvng v.00 penalty. N.

(with dividends).t. The ( plaintiff Co: was a corporation under the laws of )ntario. • . Y. Div. could compel the transfer of shares at the New York transfer office of a New Jersey corporation. 218 N. Y.->. and which. it is alleged in the complaint. that the defendant maintains in the county and city of New Y< irk. Canada. the National Bank of Commerce in New York. Steel Corporation. Lockwood v. (N. reversing L53 X. its corporate stock for certificates its books and of delivering new 190. also. & 0. an office for the purpose of receiving certificates of transfer upon 39. 155 Where Cause of Action Arises ence to Transfers by Transfer Agent. Y. S.* it was held that an ancillary executor of a non-resident. App. As successor trustee it sued the rail road to recover shares of stock. was denied. and necessarily admitted by the demurrer. was held in Toronto Trust Co. Mem. to set aside the service in New York. 12.: §89] VENUE § 89. In the present however. ( '. U. knew the predecessor trustee had no power to transfer. 40. (1S84) 32 Hun. R. v. with referThat a cause of action arises in the state where a transfer agent im- properly transfers stock.) :. it alleged. The court said "The proposition is for which the defendant contends that shares of stock have their situs only in two pos- sible places —either at the domicile of the corporation c or at the domicile of the stockholder. that had been transferred without authority by its predecessor trustee. (1913) 209 N. the defendent and its transfer agent. Y. B. also a foreign corporation. officers Summons was Motion served upon one of the in of the railroad. there- because the cause of action arose fore the New York and In New York courts had jurisdiction. R.

Does not this fact New York at least the domicile of the corporation." . to some extent —so far as the registry and transWe think it fer of shares therein are concerned? does.156 TRUST COMPANY LAW [§89 when such constitute transfers have been made.

according to the usual phraseology of trust company statutes. Trust Company as Depository. 1909. for banking business. A 1. a safe deposit company. Preliminary." These functions import merely a common law liability. Mo. nor is the vesting of power in a trust company to carry on this kind of business operative in any exclusive way to its being conferred on other corpora- example.CHAPTER XIV Trust Companies as Depositaries— Safe Deposit Companies §90. Trust companies generally have a banking feature and a trust feature. S. that the former §91. The distinction between a depositary and a depository apis pears to consist mainly in the fact." and to become a "depository. which would a not be a trust company or have any power to carry on tion. and under statutes. Sec. to guarantee special deposits and to Thus own or control a safety vault and rent the boxes therein. many states they may 1 act as "bailees" for the Missouri statute authorizes them "to receive upon deposit for safe-keeping personal property of every description. R. . of hire. as to which no preference is given out of general assets or any lien upon a special fund. 1124.

Code 1903. 23 S. however. Co. S. with a possible or contemplated 4 The liabilities. a contractual point of view. 535. or under 2. We find this distinction in some statutory phraseology. duties and degree of care right of user. Thompson v. Sec. In the sense that a deposiis tary is not a trustee. E. D. . while the former has merely custody and care. many statutes utilize corporations. 1903. (1895). and not strictly public officers. Sec. especially banks and trust companies. 9 L." while the latter arises in an ordinary contract of bailment. 25 N. Simpson (1884). obligatory on depositories and depositaries depend on various considerations not necessary here to be con- These depend. 1353. 795. 123 N. 141 W. Roberts v. A trust company is recognized as a banking insti- tution under the general ute. Rev. 501. 3. 38. words of the bankruptcy stat- which provides for courts of bankruptcy designating "banking institutions as depositories for the money of bankrupt estates. 4001. Y.158 TRUST COMPANY LAW [§91 a public agency. Colquitt S. on statutes and inferences therefrom or upon the nature of transactions from sidered. R. Okla. Va. Cas. Code 1899. 72 Ga. Neg. Civ. 294. Whitaker Iron Co. Stuyvesant Safe Dep. the bailor of a thing being also called depositor and the bailee thereof the depositary. . 4. Am. 574. (1890). R. 3 In the sense that depositaries are public agencies. A. and in New York an interesting question arose whether or not the liability of a trust company depository was as a banking institution pure and simple. E. the latter vested with title and active management of the res. 57. section 61." This section required courts to exact from such banking institutions. D. Sec. 2S25 N. for the deposit of public funds. v. bonds for the safe-keeping (of such moneys) (by the depositories).

The fact. C7 Minn. Am. N. association or individual banker. 59G. In Missouri. 09 N. id. reversing 154 7. Div. Sec. Lean & Trust Co.. 9217. therefore. appears that as a banking in- stitution a trust for public funds and stand to company may be selected as a depositary them as such. also.. in bankruptcy matters. Sec. the Morris case it From also appears that the trust company therein referred to must have been designated by the state comptroller as a depository for court funds. banking corporation. 9. 1909. all of this It dependent upon the particular language of statutes. and this state is taken merely as illustrative." showing equally as broad language as in the bankruptcy statute. 11:. 10. as "ap7 proved banks or banking institutions. Y. E. Of course. II. 107 N. Supp. 704. and a trust com10 pany was designated. 9858. 8. 969. or it would not have been selected by the federal court as a depositary. state or private bank. which as seen includes trust companies. may be thought. 346. The Court trust company statute was a law not intended to include as trust funds deposits by Federal Courts in the banking' department of a trust company. v. 213 N.'. while as to court funds is it stands as a trustee. (1914)." . especially as the bankruptcy statute provided for the judges exacting a bond for their safe-keeping. at least. 185. Henkel R. that when a statute makes the 5. S. Y. 11880. Ibid." 8 9 "a bank or all banks. W. the statute speaks of depositories. (1897). Board of County Commrs. Mo. The Minnesota statute provided only for the designation of any national. trust company or trust companies. Carnegie Trust Co. Y. supra.§91] DEPOSITARIES 6 159 the preference clause in trust of Appeals held that the state company laws. 139 N. v. App. Sec.

25 Holt County v. 285. 11. St. 122 affirming U. S. . and the officer 17 The was merely following a long prevailing custom. 673. A. 305. 31 15. Rep. 647. Wichita County (1887). R. 851. Ed. Cronin (1907). it [§92 company may be termed a depositary. 50 Pac. and when a governmental agency. 4 S. 10 Atl. Griffin v. claimants thereof cannot hold the public liable for their loss. 767. 13. 226. 15 14 appears to be is true. see cases cited. E. is a depository. County of Mecklenburg v. 29 L. A. nor liable as such. Board of Commrs. 14 Wash. Ed. 44 L. (1894). or liable as such. 67 Tex. 63 Am. Parker (1894). 38 Pac. 1032. Polk County (1879) 51 Iowa 50.160 TRUST COMPANY LAW a trustee. W. 675. 480. U. 67. 112 N. v. 107. Beales (1911).). 180. statute uses the word. U. 424. 111 Va. 49 N. Rep. 37 Pac. R. 561. C. 175 U. A. W. 543. Branch v. 14. §92 banking Liability of Officer for It Loss of Funds in Depositary. S. 199. (N. 36 L. unless a institution designated as a depositary for exercising his an officer own discretion in the selection of a depositary will be liable for their loss. 69 S. Security Bank (1899). Mississippi Levee Commrs. 33 16. 100 U. 114. L. of St. Colquitt v. Marx v. S. L. Minn. public funds. and this though the public authorities have pro10 vided no safe place for their keeping. R. 849. and not it a trustee. Condert v. depositary not in a distinguishing sense at all as. Fairchild v. 5 Wyo. A. 1 '"' under court orders or decrees. Contra State v. 12 When an is the repository of public or private funds. 888. 58 Kan. Simpson. 129 Pa. that. 75 N. S. 815. 73 Fed. however. 672. 9 Wash. (1897). 19 C. Brown v. 17. Louis County v. 337. 15 So. Hedges (1896). (1899). St. Fre- quently. 77 12. 764. 691. Com. Bailey (1887). Ed. 174. Thomas (1873). v. 926. 89. 71 Miss. Wilson v. for example. 1049. 213. 759. 43 Am. 11 As to funds placed with a depository the relais tion arising institution that of a debtor and creditor. S. 79 Neb. 15 Wall. 44 Pac. 117. Foster (1895). 21 L. S. W. 178. St. Rep. Wyandotte Co. 674. 47. (1S80). 473. Lowry v. 125. supra. Am. W.

but bonds may little be so conditioned under statute. 151 N. (N. 296. 54 Am. TillingMerrill (1896). 437. this has been held. E. 124. make him § 93. Hicks (1909). 844. E. notwithstanding his 20 prudence and good faith. 3 How. Cameron v. 926. Rep. Ed. \\T 427. 17 Ann. 777. C. W. bound to the exercise only of 10 reasonable prudence in selecting a depositary. 19. to be true especially officers to a less And this would seem under a rule which holds such court stringent rule than that applied in the There is no rule. v. Reed (1906). . 7 L. 4S4. Liability of Officer of Depositing Private receive Funds. liable for a bank's failure. 31 L. v. . 49 Pac. 95 S. Montgomery County State (1891). A. 116 Tenn. A. Y. 3S9. 266. Alston v. 34 L. R. 34 S. 45 N. them to a hast U. 659. 57 L. R. Cicero (1902). I deposit of public funds. instead of making a deposit as such. Fentress County v. 832. v. Overton Copeland (1896). Livingston County v. 92 Ala. 578. 612.§93] DEPOSITARIES 161 good faith of the officer is held to constitute no defense. R. 375. W. 11 L. more stringent liability. Cas. 9 So. 65 W. Woods (1897). 20 Mont. public funds in such depositories. 57 C. Va. 732.) 10S4. 734. A. 13 L. 63 Neb. A. 64 S. R. Rep. as to less make and constitute the officer as more than a bailee. St. R. 809. 135. If an officer. 303. believe. even where he would not be held as an insurer. places it to his account on general deposit. 89 N. 121 Fed. S. to liability stringent. 840. virtute official is Various officii officers court money and if the court or duly authorized to some other tribunal or select depositories and do and the statute not only authorizes but directs its it must be thought that such officers come under the same rule as those officers who deposit so deposit therein. 91. A. Prescott (1845). 20. 678. St. v. that holds 18. 56 Am. however. A. Cochran (1903). 110. 96 Tenn. S. because the terms of his bond make him in effect 18 an this insurer for the safe keeping of public funds. 17.

10 Colo. 477. G20. 944. 41 2::. R. 34 Wilson 449. 487. 125." The deposit was made by him as clerk and the bank had notice the money was held by him in his official capacity. 22 L. 415. Pac. St. * * * The degree of diligence which officers of the court are bound to exert in the custody of the property seems to be such ordinary diligence as belongs to a prudent and honest discharge of their duties. 243] v. 22. 23 the distinction between an holding virtute officii." The 21. If the property is lost or injured by any negligent or dishonest execution of the trust they are liable in damages. F Hedges (1896). People ex. Rep. such officers are undoubtedly responsi- good faith and reasonable diligence. . 44 Pac. where the clerk of a court deposited funds arising out of a condemnation case. and such ble for as is required of all 21 persons for their services. Sec. See also Fairchild Faulkner (1887). in a bank of reputed solvency. v. It was said the clerk acted as prudent men ordinarily do with their own funds. rel. that the same rule should to public officers who receive the money receive public who to be of individuals. 14 N. 107 N." who receive compensation This principle was applied in a 22 Colorado case. Story. 14 Wash. v. and to some scrutiny as to the custody of their funds. A. And officer in New York. pending process and proceedings. private moneys and one "It holding public moneys was alluded to as follows: does not follow because public policy requires that public officers a rigid applied money should be held responsibility.162 TRUST COMPANY LAW [§93 The rule as to officers of court has been laid : down "In respect to property in by Justice Story as follows the custody of the officers of a court. Y. who are stimulated by private interests to some watchfulness over the conduct of the officials. Am. People (1893). 117. Bailm. 190.

LOO V. There was a vigorous dissent by one judge. 699. 27 The same principle was applied Minn. law his not to enlarge this case was with an individual hanker in good standing and credit and the officer and his bond were held in this exonerated. v. s 7 7:. 664. S. 27 N. Haw-lev 20. First National Rank v.1 §94 DEPOSITARIES 163 bond case was for the faithful performance of and the faithful application and payment of his duties This was said all moneys that may come into his hands. Depositaries as Gratuitous Bailees. and the prevailing opinion went upon what it said was the established rule in Minnesota/ The distinction ruled in these 24 §94. or the laws especially. contain no reference to such deposits.">T Pacific Rv. in Northern I. 228. 25 L. The deposit in common liability. Owens (1902). Whitney v. if the deposit is made to a gratuitous bailee and it is lost by its gross negligence. 154 7. 86 R. S. 731. 26 !. Ed 212. A. L88. 27. 336. U. in "'' to in a later case. Ed. . v. 91 Am.. public securwhich ruling was adhered of the United States. such negligence. 73 Am support of the strin- gent rule. if it arises out of customary practice in the doing of business by such bailee. two cases has been denied in a Minnesota case. C. . Rep. Rank (1880). See also Phillips v. 634. 24. In such case.. This was ruled in a case by our Supreme Court ities for safe-keeping for one of 1 regard to a national bank receiving its customers. St.-)(). (1859). 505. First Nat. their charters. Graham (1880). ) . T need not greatly discuss the question of the liability of banks and banking institutions for special deposits received by them where under which they are organized. as in Ga. is equivalent to the commission of a tort excluding the right to interpose a plea of ultra vires. where private funds were deposited without a court order. Lathene ( Lawon r. I DO \\ W 25. 371.

though their employment embraced a supervision of the property. 769. 172. 959. 32 L. cases from Pennsylvania. E. The doctrine of exemption from liability in such cases of such cases was at one time carried so far as to shield the bailees from the fraudulent acts of their own employes and officers. 137 U. 30. Massachusetts and Georgia. and is lost the property deposited by the gross carelessness of the bailee. Prather (1891). but exclusively for the benefit of the the only obligation resting upon plaintiffs. S. 179. No one taking upon himself a duty for another without consideration is bound. . 788. this case quoting from the and Graham this is case. Rep. 29. 32 L." An 28. 130 U. Illinois case 30 speaks of the above case as typical v. a liability ensues in like deposit manner as if the had been authorized by the terms of the charter. M. Justice Field. said: "If the bonds were received by the defendants for safe keeping." There are cited for this principle. such acts not being deemed within the scope of their employment. 148 39 A. without compensation to them in any form. to do more than a man in of that character would do generally for himself like conditions. 35 Ed. all under is The the exercise of reasonable care dictate * * * good faith. Ed. either in law or morals. 111. in a case where there was a de29 posit with a partnership engaged in business as bankers. 004. S. 267. N. 810. Mr. A. Manhattan Bank of Memphis Preston v. Walker (1889). Gray v.164 TRUST COMPANY LAW 28 [§94 the case of a state bank. as follows: "If a bank be accustomed to take such deposits as the one here in question known and acquiesced in by the directors. them was to exercise over the bonds such reasonable care as men of common prudence would usually bestow for the protection of their own property of a similar character. 34 L. Iowa. Merriam (1893). R. St.

322. 32 L. yet they were not deemed gratuitous bailees on the old duties common law theory of the and liabilities of such bailees. 775. Carliart (1803). 51 Am. 628. 797. Bk. v. though banks were not in the loss thereof T 11 business of exacting compensation for safe-keeping for customers of special deposits. direct or indirect." special deposits does not absolutely demonstrate a general. 31. 32. 39 Ohio St. unless the depositor was obliged to allow it. A. . 15 S. 22 S. way also a general depositor in the bank is hardly sufficient. R. 831." and it declares that: "when securities are deposited with banks accustomed to receive such deposits. Rep. L05. w hich good business men should exercise in keeping property of such value. E. Zent (1SS3). unless the retention of the general deposit account was So an incidental earning of fees for stipulated for. 165 of cases which present "more liberal views as to the liabilities of bailees without reward. 17 L. Bank v. still less a universal receipt of consideration. It was held in a Georgia case that to prevent a special deposit being a gratuitous bailment with a bank there §95. See also Merchants' Nat."' Thus it is seen that." 3 See also First Nat. Guilmartin (1892). accruing "The fact that the special depositor is to the bailee. BS Ga. 95. E. R. Liability on an- other theory seems to have attached to them.1 §95 i "ii vi ek 'i. because of the reputation they enjoyed and necessary to be sustained as a business asset. must be something in the directly connected with the bailment of compensation. Property Held as Collateral by a Bank. 95 Ga. Such benefits as are wholly contingent and dependent on the pleasexchange or collection ure of the depositor cannot affect the character of the And "the custom of the bank to accept bailment. St. Merchants' Nat. 394. they are liable for any occurring through the want of that degree of care. Bank v. A. would not be a consideration.

It its was said as to this that: "The bonds came into (bank's) hands in the usual course of business as collateral security for loans to a customer. K.'' deposit is A Where bonds and bank as securities are deposited with a collateral security upon a loan made by it. R. Service Co. 2G3. 58 Me. 35. and this would be true as to such collateral remaining 35 in a bank after the loan has been of an application for a paid. but does bind it to take the same care of it as 34 of its own property. was ruled that the mere who made way with the not gratuitous where a bank is paid for collecting dividends.. 119 N. or offering to return them its to their owner. this does not make a bank an insurer of the safety of the deposit. and it had never relieved itself of the liability thereby incurred by returning.. however. 275. it employment of trusted agents. that even were a bailment that of a strictly gratuitous nature. Nat'l.166 TRUST COMPANY LAW [§95 This case shows that benefit to bailee may arise out of very slight circumstances to change a deposit of this kind to one for mutual benefit of bailor and bailee. agreed. 23 N. On the contrary. Ch. and if they are converted by a 3 bank manager. Ouderkirk Bank (1870). It deposit. L. the bank will be responsible. Central Nat. * * The extension of lines of discount and credit to persons ?/. yet in the latter Georgia case. must go further and show it exercised proper supervision over such agents. I may say.'. if it is left in anticipation further loan. Y. 34. or for exclusive benefit of bailee. was not sufficient to exonerate the bailee. B75 . 6. Bank (1890). to continue as their custodian for the purposes for * which they had theretofore been employed. 212. through proper financial Re United Tonkins v. Village v. it agent.

deemed mutually beneficial to both parties. Cutting v.. Rep. and afterwards there will be noticed cases where in agreements by way of reorganization or otherwise special deposits in the nature of escrow are made. 90 N. The other company. 36. 479. Ed." 3 It was said in this case that was immaterial. § 96." The same rule applies to securities forwarded with an application for a loan. L54 U.4. 37. and it must often happen that such loans are from time to time wholly or Intervals of days. 660. Bank v. V. Jones v. 22 Am. that storage paid for by the owner of goods "is a species of bailment like that existing in the case of the depositor in a safe-deposit company. 7S N. Bovd (1875). and months may frequently elapse between discounts. is it that of a depositary for hire. See also Third Nat. has been said. who ' hires a box for his valuables it and keeps the key. relation a Liability of Safe Deposit Companies. which holds itself out among it things. 30 What is the rule to be applied to safe deposit companies and to trust companies renting safety deposit boxes will be now considered. it Md.§96] SAFE DEPOSIT 167 engaged in business upon stipulated securities is one of the most common features of banking. to care for property placed with for safefor such It keeping. and it would be quite absurd to hold that during these periods the bank occupied any other relation to its customer than that of custodian of his bonds for purposes. . sumed the obligation of ordinary care and prudence in Bank of Montreal v. Morlor (1879). 35. as it was "unnecessary to define the precise nature of The defendant asthe contract or to give it a name. White L880). Morgan (18S2). 307. weeks partially paid and satisfied. 4f. for a compensation to be paid to safe-keeping. I. I S. 26 47. that in conversations between the parties the price charged was called rent. V.

the Court said that the company was no doubt." The Court then proceeded to say that: "When storage. as a prudent and intelligent without doing more to prevent such a result or to repossess himself of it.A. 39. 25 N. Y. Y. (1898).168 TRUST COMPANY LAW [§96 keeping the goods." And a later New York case 38 re- ferred to the charter powers of defendant as authorizing it "to receive on deposit as bailee for safe-keeping and money. Y. Supp. App. Neg. (1890). 9 L. The defendant did not discharge the duty that it owed to a bailor and owner of the property by merely making a formal protest against entering the vaults where the property was. & W. A person who would allow his own property to be taken from him under like circumstances. 28 N." In speaking of the arrangement whereby a depositor was furnished with a key to a safety box rented. speaks of safe deposit 38. 68. upon such terms and for such compensation as might be agreed upon by said corporation and the owners of the property or the bailors. 974. Cas. . Co. plate. 1 Am. securities and other valuable things. 57. Lockwood v. 123 N. as authority. Manhattan S. 438. 50 N. if and to adopt such taken. when taken. property. and if it is not. case." Another' New York v. Roberts R . 39 which refers to the Roberts case. 294. then it is his right and duty to refuse and to offer such resistance measures for reclaiming man would if it had been demanded and taken under a claim of right to the property by another without legal process. under color of process. jewelry. is demanded by third persons. in the custody of a bailee for hire. and to the taking it. E. it becomes their duty to ascertain whether the process is such as requires him to surrender the property. 535. supra. Div. Stuyvesant Safe Deposit Co. "a bailee for reward. could scarcely be called a prudent man.

The court said of a contention by defendant: "It is urged upon the part of the defendant that it was not the bailee. it is difficult to know who was. that the arrangements usually made as to keys by depositor and company in no way affect the duty of the company to "exercise that ordinary care and vigilance which men ordinarily exercise and ought to exercise that of a depositary for hire. because she could not obtain access to and active participation She could not go into her safe unless the defendant used its key first and then allowed her to open the box with her own key. thus absolutely controlling the access of the plaintiff to that which she had the property without the consent of the defendant. ant's The vault was the defend- and was in its custody. because it was not in possession of the plaintiff's property. If vaults it was not." There are many other cases which hold. the relation of the defendant to the plaintiff and that when the plaintiff gave evidence tending to show that she had placed property within that safe which was owned by and in the custody of the defendant.§96] SAFE DEPOSIT 169 and of a customer having the right of access to separate boxes rented therein only with knowledge and participation of the company's employes. As well might it be said that a warehouseman was not in possession of silks in boxes deposited with him as warehouseman. and its contents were under same conditions. because the boxes were nailed up and he had no access to them. she had made out a prima facie case calling upon defendant for explanation. was . It is perthe fectly clear that under the ordinary principles governing bailments. Certainly the plaintiff was not. in effect. deposited within the safe. and that it had been abstracted therefrom.

So." 41 And it was held in a Texas case. all It is thus seen. 110. Sav." 40 own Mayer case. Cal. 42 Tex. that the company "was required to use that degree of care in the protection of this property from thieves without and thieves within. W. Brensinj?er (1890). that in view of provisions in the use by the depositor of his own key and the necessity of patrons to register and be identified when applying to enter the vault. Safe Deposit Co. supra. (1906). St. 72 Am. ISO 111. 534. 27 Am." The Cussen case. 596. supra. the loss by plaintiff of his key in no way amounted to contributory negliafter they gence making it possible for the finder to abstract money from plaintiff's box. it was said that: "Although one who hires a box in the vaults of a safety deposit company may keep the key himself. In the be held to at least ordinary care in keeping the The duty of exercising such care arises from deposit. said where there was ques- tion of safety money having been abstracted from a box in a vault. 85 Pa. that arrangements so far as access to a deposit in a safety vault of a company are con- cerned seem not to affect the question of possession of 660. St. Rep. 54 N. St. App. 391. Pollock (1878). v. E. 26. 159. Civ. and it was required to use that same degree of care in the selection of its employes and in the supervision of their conduct were employed. Rep. 196. 133 Cal. Bank (1901).170 TRUST COMPANY LAW in the protection of their [§96 under such circumstances property. Dill/. 91 40. Cussen v. 1099. . 65 Pac. v. yet the company without any special contract to that effect. 41. 85 Am. 221. the nature of the business which the safety deposit company carries on. The obligation to discharge such duty will is implied from the relation between the parties. Guaranty Trust Co. Rep. v. Maver S.

Spinning (loom. the case as to lia- might remain as before any act of carelessness. over the box. The court held that the company did have control. 23 Wash. and the court might even require an inspection of the contents. ( contributed materially to loss of a deposit. Trowbridge v. this mighl exonerate the depositary. unless they were in the box and it recited the facts about it having one key and the defendant another and the necessity of the two acting in co-operation in order to open and get at the contents of the box.shall remain intact. 62 Tac. The effect of this is merely that seizure may he made by garnishment and the remedy perfected by supplementary proceedings. that. R. St. 2-04. A bank in which defendant in a suit had rented a box in a safety dep< >sit vault was garnisheed and it answered that it did not have effects of defendant under its control. The question was gone into very much more fullv 4 " 42. pository that the deposit . Possession by Safety Deposit Company so § 97. and the defendant could not remove the contents without the consent and active co-operation of the garnishee. but. S3 Am. in the sense of the statute. because: "At any time on the request it of the defendant the garnishee could put within the power of the defendant to remove the contents of the box. As against the defendant then the garnishee It had control of the box. i^.§07] ATTACHMEN 171 These arc merely for convenience and possibly amount to additional guaranty by the de >f course." to be was then noted that the contents could be ascertained by causing the defendant examined as a witness. Rep. if a depositor's negligence a depositary fur hire. L. 12£ . it must be conceded. A. far as Attachment is concerned. 806. specifically if his carelessness is offset by provisions in an agreement for it deposit so as to render bility harmless.

The Among cases ruling like the Tillinghast Illinois.) 764. then the contents of such receptacle. National Safe Deposit Co. 7 Cush. or not. Bottom 111. which box or trunk might be opened directly by the use of one key retained by the owner of the box. as those words are used trunk locked and placed by its our statute. 136. R. It is in perceived that the Rhode Island statute is not as narrow 41 as that of California. The position of the contents does not differ from that of the contents of a box or owner for safe-keeping in the vault of the garnishee. 41 L. Johnson (1912). v. with regard to their possession by the garnishee. E. Hudson (1871). 973. 487. 82 Atl. 788. (Penn. though the owner has attempted to bar access to them. in a case decided the court said: "If these boxes are in possession of the find garnishee. 44. and speaks of them as being the basis of statements made accordingly by a number of Tillinghast case refers to text writers. 250 584. Gregg v. then the condition of the contents thereof. Clarke (1851). according to the terms of statute. * * * a slightly complicated method has been adopted for * * * securing their contents against access. Tillinghast 43. 45. After considering cases where sealed packages were held. which says "under his control. does not differ from that of the contents In the case of these boxes of sealed parcels. 95 N. (N. A. 34 R.) 91. as we them to be. are also in the garnishee's hands or possession. attachable. 8 Phila. If the receptacle is in the hands or possession of the garnishee. but the method is immaterial. 430. 45 case is a late case from v." two prior cases holding the other way. . 23 Ann. Stead (1911). v.172 TRUST COMPANY LAW [§97 43 by the Rhode Island Supreme Court. Cas. S. and also a case by I.

ap- plied the several cases above cited to a statute requiring to a safe deposit company refuse to deliver to legal representatives of a decedent any securities belonging to such decedent without giving notice to the state's attor- ney general and treasurer. Washington 149. without it being at all necessary to say whether there was a strict bailment or what was the nature of the bailment. Illinois Ed. is Where a safe or safe deposit box or compartment it is rented by more usually taken jointly with access to either. 47. affirming the case v. if securities placed in the there were such. 232 U. National Safe Dep. said: "A mere device to guard from intrusion the defendant's property District of in the vault of a trust company neither divests the de- fendant of his property. The court thought that the statute in speaking of possession used an ambiguous. Susquehanna Coal Co. word which well might cover such control as the deposit company exercised over boxes in its vaults. than one 46. Stead. App. v. (1905). D. Co. so that they might examine them before delivery. speaking of a box in a safety vault. Joint Renting and Access. L. supra. v. 26 (1914). 504. 53 L. Co. nor releases the company from There is no magic its charge of defendant's property. S. C.§98] JOINT RENTING 1 173 Columbia Supreme Court." 47 The Federal Supreme Court. . sub nom National Safe Deposit Co. the safe deposit company being required to retain a sufficiency of such securities to pay inheritance tax. 58. in two keys. & T." This latter case. a master key and a customer's key. to put property belonging to a defendant in an attachment beyond the reach of creditors and the process of the courts. §98.

could only 48. recover the securities and papers deposited in the safe. Robinson (1892). since the legal title of the defendant would effectually bar the recovery of posProceedings to session against him by that means. 50. Bangor 522-. Patterson et al. Thus in an action 51 by the executors of a deceased joint lessee against the safe-deposit com- pany and the other lessee. 49. lawyers or brokers. the acts of each other/' and powerless exposed to loss by in such instances from the depositary. and in which each is accustomed to deposit his papers or like that of "The condition of things was securities. common was immaterial to the Such depositors to recover are. Supp. The court said: "The remedy at law by an action for ejectment was inadequate. v. who had renewed the lease of the box in his own name. who sold them to an innocent purchaser. 5:2 Fed. A constructive trust exists between the depositors. 170. v." 48 In a New York case whether such depositors were held to be this relation joint lessees. with a common safe or vault. so that one cannot renew the lease to the exclusion of the other or others. it was held that equitable relief would be granted compelling access. . Patterson et al (1891). a United States District Court said: two persons. 520. 1G N. 520. occupying the same office. 170. wherein indorsed certificates of stock belonging to one joint depositor were stolen from a safe deposit box by another. Robinson (1802). (1891). Bangor Electric Light & Power Co. but hi was that of joint tenants or tenants in issue. Y. v. Y. Racket et al. to which each has access. 16 N. Recovery was allowed against the innocent holder. or an action to recover the value thereof. Supp. 52 Fed. v.174 TRUST COM PAN Y LAW [§98 In speaking of such an arrangement. of course. Electric Light & Power Co. 51. Hackett et al.

but either to have power to appoint a deputy. box together and to permit access thereto by each other. A in case of liability an 52. 142 X. It means of making or removing deposits a thought that the depositary cannot deny it in a proper case. 138. In re Squibb's Estate. 393. could not he therein awarded. 63 If he lacks the requisite authority or is not the person described in the loss may fall power of attorney. If he is dishonest. Matter of Brown (1914). and the contents thereof might not be susceptible of pecuniary recompense. V." A posit right by survivorship to contents of a safety de- box rented by husband and wife was denied. 82C. But in spite of these the instances are grave is risks. or access thereto. Y.) 1ST. since possession of the safe. L60 X. Y. (N. many that render this necessity. the survivor or survivors to have access thereto in case of either. sec Carlisle N.caused will fall upon the depositor who appoints him. a safe deposit box together. The risks of granting a power of attorney to secure access to a safe or safe deposit box involve the honesty. power and identity of the agent appointed. Supp. 313. Supp. Y. property placed therein by each did not belong to the other. v." Of this the court said: "It has not been possible to find that this to hold the was anything more than an agreement § 99. App. L49 X. 157 .' The contract of rental read as follows: "We agree to hire and hold safe No. though regulation of access by agent is a proper and commendable precaution in the interest of both parties. Y. Norris (1913). Supp." Access under Power of Attorney.§99) access 175 result in partial relief to the plaintiffs. 80 Where husband and wife rented For an instance of such lus-. :">:!. was made against the depositary where two strangers were admitted Misc. the upon the depositary. any loss therein. as joint tenants. Div. Illinois case.

This the Supreme Court of Illinois said tended to show "not only want of ordinary care. or take the name selves. but actual negligence in the protection of the property intrusted. Rep. or ascertain their address or business. 196. or require the strangers to identify themtorney. Mayer v. 110. 159. St.176 TRUST COMPANY LAW [§99 box who had a key and an alleged power of attorney. but the depositary did not retain the power of atto the of the notary before whom it zvas executed. 54 N. Brensinger (1899)." 54 54. 72 Am. 180 111. E. .

which holds itself out for the doing of a particular character of business. Preliminary. its its contracts to successors upon expiration of being supervised under strict regulation. or in performing an agreement of such nature. especially when an individual should go into bankruptcy. but also for private interests. not only for the business world.CHAPTER XV Escrows § 100. and there need be no special caution against the rights of third persons against a party holding an instrument in escrow. with long life. or make an assignment in insolvency proceedings or . an agency for the carrying out of escrow agreements of a peculiarly fit nature. its The organization of a trust company. and also of agreements in the nature of escrow. and property. There is so much to be implied in a contract with a corporation. Confusion might arise. and especially the many other safeguards in respect to the care and custody of making of such care and custody features of business under specific charter provisions seem to provide. its ability to surrender its its life. that the same particularity of statement in contracts made with it is not necesis sary as in an agreement whereby an individual in a case to act under this power.

28 Atl. 55 N. 18. 45 Pac.) 41L*. 154. Foster v. 40 Kan. St. and. 389. 921. Hoyt v. 1114. pure escrow agreement. 53 3. and the small fee all ordinarily paid in such matters nevertheless gives to parties in interest the right to inspection of papers reports as occasion arises.178 TRUST COM PAX V LAW [§101 should sarily sional The records kept by a trust company necesdie. 160 Pa. or where merely suspense. Haeg (1803). Dec. N. M. yet in suspension. 515. Mansfield 4. when some ment delivered would take effect according to tenor. Thistlewood (1888). 66 Ala. Lang. Lagan (1803). 19 Pac. I hope specifically to point out in this § 101. does not make of an instruto ment a true escrow. 3 Met. Wright 2. v. The Nature escrow is of a Strict Escrow Agreewritten instruits ment. provides for the delivery of an instrument when the conditions of its deposit in escrow have been fulfilled. Minn. L842). 629. Stephens v. irrecoverable for a stated its period. 232. or that some third party shall per- some event shall occur. 37 Am. 77 111. or an event stated to happen prior to delivery shall have happened. 72 Pa. W. therefore. Taylor v. Dxivall (1875). until the party to be benefited by 1 complete delivery shall perform or cause to be performed 2 some 3 precedent condition. Rinehart (1872). 434. Hughes v. 475. and Advantages of the above and other kinds chapter. that effective is an instrument become 4 A on compliance with a certain condition. must be kept clearer than in the case of an occatransaction with an individual. Haeg v. This kind of an agreement involves merely proper care and 1. Landon 538. Brown (1894). 800. (Mass. therefore. An if arises. but decision is variant whether a mere event. W. Stone v. I . 55 v. 87 Iowa 746. 33. Cate (1896). which is to happen does anything more than hold delivery in form some act. 29 Ore.

" but the I v. C. though strictly not escrow agreements. Board of Supervisors (1899). American Loan & Trust Co. v. . 122 X. This provided for subscriptions by counties. call into This kind of an escrow- employment the great advantages of a trust company as do those agreements rather in the nature of. Custody and strict compliance with specific directions as to disposition of the escrow are the measure of liability and there is little room for the exercise of discretion. where there was called a trustee. the issuance of stock to the counties and of bonds by them and the deposit of the latter with a designated trust company to be held in escrow and delivered to the railroad company as provided by each county and the railroad company. (1890). 93 Fed. A deposit of this kind does not concern property so it much as in does mere writing concerning rights in property or contract. A. Farmers' Loan & Trust Co. The trust company brought suit to compel defendant company to deposit with it bonds called for by a certain agreement. 579.§101] ESCROWS 179 custody and a seeing to the performance of conditions or the happening of an event mentioned before the in a strument deposited does not so greatly in escrow shall be surrendered to party to be benefited thereby. 460. In pure escrow agreements the duties and powers of depositaries of escrows are exceedingly narrow. its bill styles itself a 'trustee'. Bean 6. V. 35 C. 1 '' considered the effect of a special legislative charter to a railroad company. and if the depositary acts in good faith the courts will 8 afford him the utmost protection in its power. Therefore the holder of an escrow is never This is well illustrated in a case decided by Fifth Circuit Court of Appeals. The court alluded to an averment that "appellant in 5.

R. A. It has done no service nor contributed anything of value that can support its claim to have an interest in the contract beuntil the tween these parties. 168. Am. and then to be delivered by the depositary to the obligee." It is not conclusive that the depositary of an escrow may discretion in reference to the not be vested with some discretion. 593. 367. W. 20 S. 91 N. 9. 107 N. W. It is 7 if the escrow is a paper negotiable in the general rule. D. but it is not a management of property. . otherwise valid conditions as to its retention or surrender cannot occur. the contract 10 back of it need not itself be in writing. & Trust Co. Musson (1906). of an escrow it For the creation of a depositary is essential that there exist a binding 9 contract between parties. 381. 68. Campbell (1901). 8. St. Rude Mays v. 814. 716. 42 L. v. 87 Minn. 54 L. 467. Thoraldscn v. 7. 496. (1904). Rep. that an unau8 thorized surrender by a depositary of an escrow does not bind the obligor. 1156. Hatch (1902). 389. 23 Utah 569. 117 Ga. or the happening of a certain contingency. Clark v. there must be delivery of the instrument. But while an escrow is itself an instrument in writing.180 TRUST COMPANY LAW [§101 court said : "The elementary idea of an escrow assumes that the obligatory writing has been delivered by the party executing it to a third person. however. S. 508. 14 Okl. 79 Pac. Powers v. especially form. 90 10. Mercer County (1898). as well as to become a * * deed or writing of present obligation. . E. Provident Life Ed. Shields (1903). but a discretion merely in determining when a condition precedent to the surrender of an escrow has been per- formed. * To become an escrow. 45 S. to be held by him performance of a specific condition by the obligee. 05 Pac. 89. 170 U. Schmidt v." Until the company became an actual depositary it was said: "It has not and cannot have any interest in the negotiations.

but I wish to distinguish in this work these deposits from those in which the relation is rather that of trustee than dein These latter deposits are greatly more important and as a general thing might extend over a vastly greater period of time. The contract may be and often is very simple and. being render is upon a present consideration.§102] ESCROWS § 102. It is true that in agreements which depositaries for escrows are selected. is but a detail in negotiation. 181 Summary. the business of trust companies and their facilities for safekeeping of instruments of writing make such companies come to the minds of parties very readily. . In this way the deposit of an instrument in escrow. Escrows generally conpositary. arrest or keep in suspension the fulfillment of a contract until a condition is performed or an event happens. its fruition is not apt to be delayed a great while. template a brief period of time. especially when sur- dependent upon the performance by obligee of Escrow is an arrangement to a condition precedent.

the court said: abstracts of titles is "To furnish undertaking its it a business. guarantee features. The agent has only to furnish the facts from the register's office. without duties in a skillful concern for their legal 1. as distinguished from the banking supervision generally applicable to trust companies. Dickel v. W. 431. Abstract Business and Title In a Tennessee Insurance Defined and Contrasted. stated by rendered no such In its powers.CHAPTER XVI Trust Companies as Conveyancers. effects. 1 Searching. St. 24 Am. 14 Rep. in many examine. in the absence of express authority. trust companies have § 103. Parties assume the responsibility of discharging and careful manner. Patience in the investigation of records is the main capacity required. Upon the facts furS. 89 Tenn. (1890). . As the attorney-general of Indiana in an opinion on December 9. case. Abstractors and Title Insurers In General. 616. There is no professional opinion. it is essentially an insurance business. and therefore attracts insurance supervision. Trust companies charter or statutory power to have the states certify and guarantee titles to real estate. § 104. Nashville Abstract Co. 896. 1910.

v. (1907). S. 12 L. that when the insured gets a good the covenant of the insurer has been fulfilled It is apparent from the very nature of is no liability. 65. it was said that "The risks of title insurance end when the risks of other kinds begin." must determine for himself on Title insurance has been defined thus: "A policy of title insurance means the opinion of the company which issues it. A. (N. and that if.: §104] TITLE INSURANCE 183 nished. (1903)." 3 In a case wherein recovery upon a policy was defeated by reforming it so as to give it effect upon the date intended. liens or incumbrances that takes it. German-American Title & Trust Co. In the contract and there before us the absence of any special note as to the date negatives any intention to take this case out of the general rule. Foehrenbach v. there is a discrepancy between these dates. instead of protecting the insured against matters that may arise during a is stated period after the issuance of the policy. 176 Penn. Trenton Potteries Co. may through affect or burden loss title. 3. the contract that it usually bears the same date as the deed of the title which it purports to insure. the purchaser their sufficiency. de- signed to his title save him harmless from any defects. 331." In the same case the distinction between the two 2. and loss should result in conse2 quence to the insured. as to the validity of the title. Y. therefore.) 465. R. when he It must follow. Title Guarantee N. 66 Atl. as a general rule. 561. Title insurance. backed by an agreement to make that opinion good. 217 Co. it must be due to some exceptional circumstance which should be noted in the contract. in case it should prove to be mistaken. in a given case. & Trust .

\?. in such transactions its duties and reit holds itself sponsibilities are the same. See 4. Y.1S4 activities of TRUST COMPANY LAW [§105 searching and insuring is brought out. Y. App. of examining and guaranteeing titles to real estate for hire and profit. * * * The obligations assumed towards each other and were. is a domestic corporation organized other things. Holding that plaintiff was entitled duties that the parties Elmer v. Title Guarantee & Trust Co. (1898." Duty as Conveyancer to Advise Client of § 106." may be liable for any may have imposed upon § 105. and hence the case must be de4 termined upon the same principles. 2424.2 N. therefore. also Glyn v. it was held by the New York Court of Appeals that: 'The defendant for the purpose. Encroachments. Under the contract of insurance no question of negligence in searching can arise. 156 N. similar in all respects to those growing out of the relation of attorney and client in transactions of the same character. Relation assumed by Trust Company in Examining Titles and Acting as Conveyancer. Y. and secure a deed. This action is brought upon the contract of insurance. 859. (1009). and. Title Guarantee & Trust Co. hence. The court said: "The contract of insurance is distinct and separate from the contract of searching. search title. 10. In all matters relating to conveyancing and searching titles among out to the public and assumes to discharge the same duties as an individual conveyancer or attorney. 117 N. Supp. Under the contract for searching titles the defendant damages which its negligence the plaintiff. Div. . Where a trust company was ^retained to draw up a contract of sale. and it was sued for improperly describing the property conveyed.

§107] MEASURE OF DAMAGES 185 where she alleged that she employed a title guarantee company to search the title and purchased relying upon a letter from them that failed to mention to recovery certain encroachments. sumed the same responsibilities and owed to the plaintifl the same duty as if it had been an individual attorney or conveyancer. V. the court said: be observed that defendant undertook to as a conveyancer. V. 859. conducting a purchase of real estate The trust company procured a deed covering an adjoining house. This involved upon its part the exercise of due care and skill in investigating the title. Title Guarantee & Trust Co. and thereby assumed all the obligations of an attorney to his client. Div 10. Ehmer v. Y. Supp. the defendant asable title. E. 117 N. letter falls far short of * * * This informing plaintiff of or even sug- gesting to her the true state of the encroachments upon the property. It has assumed the relation of attorney. (1898). Title 5. who undertook to insure that she had a good and marketIn the former capacity. 50 N. L56 X. App. act for plaintiff in two capacities who examined the title and undertook to advise her "It will — whether it was good and marketable. Guarantee 124. & Trust Co. 132 X. and the utmost frankness toward the the result of its plaintiff in disclosing to her investigations and in advising her as to what course she should take in view of the facts which had been discovered respecting the title." § 107. instead of the one conGlvii v. Liability and Measure Title Policies. and as an insurer. 420. 6. (1909). . of Negligence and upon was an action brought to recover damages alleged to have been sustained through the negligence of defendant trust Damages for The case cited 0. company in for the plaintiff.

76 S.: : 186 TRUST COMPANY LAW [§107 tracted for. (1903). There are no facts in the case upon "The defendant undertook which right to found any duty or obligation 'on her part to is mitigate the damages. 7. 207. Div. as it was with the encroachments and its value as it would have been if there had been no encroachments. In the course of opin- ion the court said "Plaintiff paid for an examination and got one. He got no certificate that the title was perfect. Y. App. ."' A plain case of negligence in abstracting was made its 8 out in Missouri. 859. App. 117 N. on which the plaintiff was evicted. it was held that plaintiff "is entitled to recover the difference between the value of the property when purchased. 102 Mo. and on the findings and facts of the case was guilty of negliThe damages which the plaintiff sustained as gence. where the abstract omitted a judgment in force against the property. 132 N. Supp. the New York Court to perform duties in the nature of professional services for the plaintiff. 8. 424. Title Guaranty Trust Co. 641. Renkert v. In affirming a judgtrust ment for damages against the negligence in handling the of Appeals said company for its matter." In an action to recover damages for failure to except certain encroachments in the title policy. Glyn v. and so we think the judgment and should be affirmed. as the title rested (1900). An additional mortgage had been foreclosure of placed upon the property desired. because de- fendant would not give a certificate. The grantee secured a reformation of the erroneous deed. the natural and necessary result of this negligence was the loss of the money which she paid on the faith of the defendant's advice. W. Y. Title Guarantee and Trust Co.

porting to inform him. whereby it would have learned that the proceedings conveyed "only one-sixteenth of the title and fifteen-sixteenths of a life 9 estate of the fee. But. W 334. MisIt was actionis worse than none. if the record showed jurisdiction in the court to render the particular judgment. i. The court remarked with reference to the abstractor's duty to examine court deposition on records "Such an examination would ordinarily be sufficient. Kcuthan v. chain of or what you will. and it would not be negligent in the examiner to fail to make inquiry dehors the record to ascertain if there might not be some possible defect in the proceedings or error in the * * * name or description of it the parties. but leading information able was nearly certain to mislead him. .". 0. in order that he might buy intelligently. and the parties to the judgment and the title claimed under it to be identical in name and description. Louis Trust Co. for was delivered and accepted as one on which a prospective purchaser might base his decision to buy or not." A trust company as abstractor was held not liable as a matter of law." as stated by it." sufficient inquiry. and furnished a document pur- on a tax deed. negligence to such a document. The document left which omission not only tended off a judg- to mislead plaintiff. furnish title. call it it abstract. :. 10] Mm. for negligence in not reading a file in judicial proceedings. if he read the deposition was of man on importance to put an ordinarily prudent and if he neglected to make inquiry he would unquestionably be guilty of negligence. App. ment lien. St. (1903).: §107] DAMAGES 187 But the company undertook to inform him concerning the stale of the title. S.

the When the third person. and the company knew for what pur12 pose the abstract was being used. 12. 102 S. Title 31 Mont. L. The applithe cant for title When examination frequently uses the abstract purchaser delivered. Denton v. to whom his customer prein is and with whom his customer uses the abstract the procurement of money or property. Title Company (1903). Economy Building & Loan J. S. 107 St. and cases v. West Jersey & Guar799. 27. as an aid in selling his property or in securing a loan thereon. 901. 64 N. Rep. 774. 854. cited therein. of the action against the abstractor in tort. Western Loan & Savings Co. v. Am. whom the abstract is shown or i. A. 435. Ass'n. unless there 9^ a republication of the abstract to such third person. 44 Atl. W. and not and the weight of authoronly to the is ity is to the effect that the abstractor is liable person to sents whom he furnishes the abstract. 10.1SS TRUST COMPANY LAW § 108. Silver Bow Abstract Co. 79 S. R. Ass'n. legally unknown "The ground to the company. (1899). Equitable Building (1907) (Tenn. 320. it owes him no duty. and that he not liable to a third person. 448. (N." The exception liable to the third is established and the company is knew that search the third 11 party where the abstract company was made for the exclusive benefit of 10 party and delivered the abstract to it. 78 Pac. . Bank of Commerce & Trust 12 L. 9% Co. to is e. (1904 ). v. irrespective of the Real Interest of the Policy Holder.) 449. [§108 Company as Abstractor is Liable to Employer and when Liable to Third Persons for whose Benefit Abstract is obtained. where the applicant made the proposed use known to the comthe vendor and purchaser both paid where and pany for the abstract. 112 Tenn. & Loan W. antee Co. Title Insurance Covers Interest Insured §109. or lender. 11. is in contract..).

Insurance carries with it the idea of some If there were no * * * risk. the risk of insuring him in his claim of title was one which the defendant could legitimately of the policy take. Evidently the defendant company with the will before construed the devise as a life estate in the first taker and a fee in the remainderman. 561. of course. admitted as correct. after examination of the muniments of title. if it chose to do risk. In this case the standard of interest.§109] TITLE INSURANCE 189 Insurance Care. He was opinion held to be entitled to recovery upon the policy for the value of the other half. there would be no cause for insurance. was a defect. coming directly within the terms of the policy? No matter whether or not the question amount of his insurance was doubtful when the was issued. * * Can there be any doubt that the reduction of his interest in the property from an ownership of the whole. German-American Title & Trust Co. and the policy of insurance 13. so. * * * * In adopting this view it was mistaken. 331. but that is measured by the standard accepted as between the parties. " an applicant secured Under a it a policy assuring him a fee simple interest. Company placed on Notice to use Great In a Pennsylvania case. A. That standard was. to that of one-half. Actual loss. . the In the course of its Supreme Court of the State remarked: "In the present case. by the defendant company. R. 12 L. for Foehrenbach or. 217 Penn. subsequent partition suit developed that he was only entitled to a one-half interest in the property.) 465. (1007). the validity of the plaintiff's claim to the entire interest in the property depended upon the construction of the language of the * will. Atl. was issued. (N. * * it. v. must precede the right of compensation. S. which was claimed by appellant was ownership in fee of the entire property.

reversing 91 N. by an and examination of the property. or whether there was an adverse claim of of any character by the occupants of the whole or any portion of the premises. claims to be the owner. Lawyers' Title Ins. 1088. 1024. Misc. whether there was adverse occupancy or not. & Trust Co. (1916). and ought to be re- garded by it as notice that unusual care should be taken in the examination of the title." (Italics supplied. 157 N. is sufficient of itself to put the insurance company on its guard. 634. as such record was not that: "It in the chain of title. Ann. 1914 D. Broadway Realty Co. Cas. title * * * The fact that an applica- made for insurance by one zvho. So when a policy refers to a survey. survey. against any outstanding . at the time. the title company will not be liable for encroachment not shown by the survey. 718. claim which would reduce his interest below that which he claimed tion is it to be. 153 Cal. copy of which is attached. agreeing to insure the plaintiff against any loss or damage by reason of defects in that particular interest or claim of title which he had presented to the company that is. 137. or examination of the premises whether he was getting what he contracted to purchase. Bothin v. 14 It was said in the opinion was left to the appellant to determine. 96 Pac. Y." 14.190 TRUST COMPANY LAW [§H0 a proper consideration. or because of a deed of trust recorded by the party in possession. Where the policy of title insurance excepted the tenure of present occupants and incumbrances not shown by any public record. (1908). 154 N. v. Y. the company was not liable because of a claim of title by adverse possession. Supp. 500.) § 110. . & Trust Co. California Title Ins. Supp. Record Title Only Insured. to determine for inspection himself by actual measurement. Necessarily the title record title is all that a title insurance company can safely or judiciously insure. Y.

§111] TITLE INSURANCE 191 Policy of Title Insurance construed to be one of Indemnity though Guarantee added. then if any loss be sustained thereby by plaintiff. although inaptly worded. 55 Atl. and one to . Provision for Subrogation of Company. Where the insured put it out of their power to subrogate the trust Effect 15. 206 Penn. brought on was suit closure of the mortgage at a loss. plaintiff must show a loss on the mortgage. If the contract were one of guaranty. The title policy. . then the plaintiff. a mere breach of the guaranty was not sufficient. under the indemnification covenant of the policy. would have a right to recover on the other hand. a policy of title insurance to protect a mortgage contained the addition of a guaranty to comAfter foreplete certain buildings according to plans." §112. 423. 1065. (1903). she could not recover unless she proved a loss on the mortgage. instead may really have largely profited by the sale of it. such loss should come "The note. That in order to recover thereon. and as such it was one of indemnity. guaranty that the buildings shall be finished in accordance with certain plans and specifications. the and evidence was offered to show that The the buildings were not constructed as agreed. opinion states: is intended to in accompleted signify if the buildings should not be cordance with the specifications. In a 15 Pennsylvania case. if the contract were one of indemnity alone. on Right to Recover on Policy. Equitable Trust Co. Wheeler v. although she may have lost nothing on her collateral. Pennsylvania Supreme Court upheld a non-suit on the ground that the policy must be taken as a whole. But the contract is not intended by its terms to be severed one to indemnify against loss from defects of into two — title. § 111.

Plaintiffs foreclosed their mortgages. Tradesmen's Trust & Saving Fund Co. became the purchasers at the sale for a part of the amount of their mortgages. A. 52 Atl. 16. An application for title insurance con- tained this provision: "It rect is agreed that the following statements are cor- and true. v. ." On appeal." A policy was paid was issued referring to the application. 17 L. tiffs were the owners of second mortgages. Paul Real Estate Title N. W. 125. (1902). and mining stock of $15. and subsequently conveyed them without consideration to the court said: first mortgagees.000. they cannot recover 10 [§H3 company on the "Plain- policy according to a Pennsylvania decision. St. Minn. 151. Seymour et al." In answer to the question : property?" policy The applicant said "$1 1. and that any false knowledge statement or any suppres"Last price paid for the sion of material information shall avoid the policy. 910. Co. put out of their power to comply with their agreement. by voluntarily conveying the properties to the owner of the first mortgage." Voidance of Policy by False Answer in § 113. the "By the terms of the policy the trust entitled to subrogation to all the rights company was and remedies of it the insured.000. As the plaintiffs. R. 52 Stensgaard v. to the best of the applicant's and belief.000 par. (1892). 50 203 Penn. and the policy insured the erection of buildings on the premises accord- ing to certain plans and specifications within a certain time. they were not entitled to recover. 575. 17. Recovery upon the last price was denied on proof that the $3. Ins. 429. Application. but of negligible 17 The Appellate Court said actual value.: 192 TRUST COMPANY LAW to their rights.

as where they it stipulate that if a statement of fact made by one of them. But the parties may by their contract determine the materiality for themselves. a question for the court. that the above answer plaintiff was material. it avoided the policy. in effect. and that if knew it to be it false. or where lates it stipu- merely that the misrepresentation or suppression of a material fact shall avoid it. and as the materiality must be shown by matters outside the terms of the contract. and that at any rate its materiality was a question of fact to be determined by the jury. In the second place the effect of falsity in is the statements on the validity of the contract to not made depend on the intent with which the statement is made. The was not material. it is a quesion of fact. but on whether true or false. 'Last price paid?' was a statement of fact. Where the contract itself does not stipulate the effect that a particular false statement or repre- sentation shall have on the contract. Whether they have made is the statement material.§114] CONDITIONS 193 ''The court below determined. An exception in a title policy of "Tenancy of the present occupants" was not sufficiently broad to . and set forth in the contract. be false. to the best of the applicant's knowledge and belief. as a statement of value plaintiff insists that generally is. as a matter of law." Construction of Policy. to be determined by an inter- pretation of the contract. as that the intent shall be fraudulent. shall avoid the contract. Conditions. the fact misrepresented or suppressed must have been material. as an induce- ment to enter into the contract. In such case the statement is in effect a warranty. and not the expression of an opinion. Exceptions and § 114. In the first place the answer to the question. and in effect a warranty.

all the plain- bound to give it the benefit of rights and remedies within his reach to possible. 120. Lawyers' Title Ins. it was not made for defendants' benefit they were not privy to it and can gain no advantage from it. it would have to do so. Even assuming that the company had insured the title and had in fact . (1915). Misc. is in actual adverse court to be possession at the time the policy is issued. Paul Title Insurance & Trust Co. 706. Y. 3fi N. paid the assessment in fulfillment of tiff is its policy. 137. If any such contract of insurance or indemnity existed. v. It Place v. St. 18. 91 N. and as equitable assignee of his cause of action. asserting ownership in fee as against the title insured. N. W. as the terms of sale provided that etc. . had become liable to pay the assessment. 69 19. Misc. not in its own right. is ambiguous. The court said "That the assessment was compromised and paid by the Title Guarantee & Trust Company is not material. 526. (1897). 404. Rights against Grantor not affected by fact that Grantee has Title Insured. & Trust Co. and so. 64 Am. See also Broadway Realty Co. Rep. the ambiguity 18 construed against the insurer..: 194 TRUST COMTANY LAW [§H5 cover the claim of a person who. Greacen (1901). make its loss as small as of the Even if it sued the defendants for the return money paid to satisfy this assessment. all taxes. the purchaser was still entitled to recover this tax against the sellers of the property. Y. but in plaintiff's right. The is applied the principle that where an expression in an insurance policy § 115. assessments. as between it and him. 67 Minn. St. would be allowed out of the purchase money and 19 the property conveyed clear. Where a purchaser took out a title policy and the insurer paid a tax assessment under it. Alexander v. nor is it material whether or not the company had insured the title to plaintiff.

the defendants. then said contention must be * * * contract of insurance is an insustained. v. Land Title Guarantee Co. Purcell 726. 94 Mo. 'contended that the plaintiffs' cause of action 1890. although for the ultimate benefit of his insurers. A guaranty is also an indemnity similar to that of insurance. 5. The defense was made by defendant and judgment of eviction against 20.§116] STATUTES OF LIMITATION 195 be his action. applies. the would still defendants have no cause to complain. and suit five barred by the statute of limitations. App." §116. (1002). It is true that the incumbrance under which the plaintiffs were evicted existed at the time of the issuance of the certificate in question. and is governed by the same it This stands to reason. and would not be contended that the cause of action accrued at the date of the policy. thereby. and loss occasioned rule. 1897. and the defendant afforded time and opportunity of defending against it. . As a right of action does not accrue until the insured time. S. statutes of limitation do not begin to run until that This subject was thus discussed at length in an title action on a policy of "It is is insurance: certificate. If the five years' limitation at the date of and the cause of action accrued issuance of the guaranty. but the indemnity was not against the incumbrances. as the in question was issued November 25. 1 '" is evicted by a superior title. When Statutes of Limitation begin to run on Title Policy. 67 W. The plaintiffs had no cause of action under their contract until the adverse claim against plaintiffs' property was asserted. and not at the time of the loss. but against the assertion of such or other claims or rights against the property. based upon his contract with If he sees fit to sue in his own name-. more than years after the date of the certificate. begun December 21. A demnity.

the register's office. maps and copies of records. he bound acquiesce in the application and permit the examination made and the copies and abstracts to be taken. (N." Records and — Remedy Company's Right of Access to Public of Mandamus. so far as that may be considered necessary. 1897. records and maps of the character. entirely minis- and its observance may be lawfully required through the instrumentality of the writ of mandamus. the breach did not occur until plaintiffs' eviction. it has been held that a estates. corporation organized for "the examination. or interests v." it was held the "Title Guarantee and Trust Company" had the power "by peremployment. title to lands and People ex rel Title Guarantee and Trust Co. abstracts and copies. Under a law of "to make. * * * The is obligation imposed upon the register to permit the books. 38 Hun. We hold under the contract § 117. December of the same in suit. and pay for such searches." In New Jersey. to place itself in a position to examine and afford the means of examining titles. is The duty imposed upon him in this respect terial. year. and to make searches. all New York authorizing it to purchase indices. and the suit in was begun that. Reilly (1886). Y. records. . however. When is either to may to be be applied for in an orderly way. and cause to be made.196 TRUST COMPANY LAW [§H7 plaintiffs' tenant was rendered in June. without aftersons in its maps and papers of wards resorting to the register's office. and guaranty of the 21. to examine the books. office to be examined absolute in its And so is the additional right given by the charter to the relator.) 429. as the trustees 21 thereof may deem necessary. abstracts. insurance.

West Jersey J. policies. 451. regulations. of Access to Public Records. 47 Atl. (Magie Eq. contracts. Separate indices required by law were open to the use of the trust com- pany." has no power to ally. has the "The resame right which may lawfully be exEvery person. Title & Guaranty Co. and undertakings therefor. subject to reasonable rules and to inspect the public records ercised by any individual. 3S1. as may make be determined by said comabstracts of records gener- pany. J . is bound to give access to the records for that purpose. (1895). may engage in the business of examining and guarantying titles as fully as this company is empowered to do by its act of incorporation. the clerk. Eq. in the several counties of this state. Right "Patent or Short § 118." The Court of Errors and Appeals said: its spondent by force of incorporation. Fidelity Trust Co. Supreme Court (1900). without legislative authority. 32 Atl. 24 2-3.§118] ACCESS TO RECORDS 197 in lands. 22. Atl. upon such terms and conditions. and the issuing of certificates. J. restrictions and limitations. 158. v. upon demand." Not Required by where the question presented was "whether the clerk of the Supreme Court should be commanded to permit the Fidelity Trust Company to examine "patent or short form of indices" kept at public expense but not required by law. 474. Barber v. reversing 49 N. to title in make it is a search with reference to a particular which interested. dissenting). 65 N. 53 N. although it has the same right as any individual. 495. In New that mandamus would 23 not be granted. When such a person or a company with such authority is employed to examine and guaranty a particular title. Clerk of L. it was held Indices" Jersey. 222. Form Law to be kept.

Justice Brewer in dekept. or with the equal rights of other persons to such inspection and examination. 131. Stat. interested in the title to real estate and desiring an examination of judgment liens thereon. 701. that intent and that provision are not changed by the fact that the business has passed from the many to the few. each one for among the separate his own client examin- which such client was interested. the public. . [§H9 Right of Access to Public Records. and cannot interfere with the clerk or his assistants in the discharge of their duties. 24. In the case cited livering the opinion of the court said what extent a company engaged in examining titles and certifying thereto may have access to and use the indices and cross indices of the judgment records prepared by the clerks of United "The question presented is to States courts. S. 47 L. Commonwealth Title Ins. Indices of United States Courts Required by Law to be 24 Mr.: 198 TRUST COMPANY LAW § 119. all The statute declares that they 'shall at times be open to the inspection and examination of (25. 189 U.' U. have access to these indices. 729. Comp. Ed. titles by one or two corporations was not con- The work was to property in members of ing the title the bar. Stat. 358. is The same titles to right of inspection exists whether one exam- ining only the title to a single piece of real estate or the a hundred. p. the monopolizing of the business of scattered examining templated. But if Congress provided and intended to provide that one. either by himself or agent. (1903). at L." & Trust Co. * * * Very likely at the time of the passage of the act. S. Veil v. 1901. It has no monopoly therein. 741.) This company as one of the public has a right to this inspection and examination. Chap. should.

620. E. and that the limitation to three was reasonable the relief 25 asked for was denied. The court held that the work. Thereafter a fourth man was added to the work. two companies were practically identical. . not about the business or work of examining titles for transactions then being made. that there was an attempt to violate the agreement limiting the work to three copyists. Richards (1885). that he represented that he wanted to put from a dozen to twenty or twenty-five men in the accumulate information." It was finally arranged that three men were to be permitted to engage in this work. . rel. merchandise or information in the business of searching titles in which it was about to engage. The registold him ter refused to permit the fourth to continue with the Whereupon the second title company brought mandamus proceedings to compel access to the books in behalf of this fourth copyist. N. pany is making complete copies of Records Number of Employees Having Access to Records At One Time Limited. having the same officers. Y. 99 N. but that their business was to copy the records of the it office and would be of value to the company as matter of sale.. so that office for that purpose. 258. A representative of a new title com- — pany stated a the office. in effect. that these men were to be employed. 25. People ex. to a county register "that he at wanted to put number of men work to obtain copies of records in and saying. but ostensibly in behalf of another title company. 1 German-American Loan & Trust Co. v.§120] ACCESS TO RECORDS 199 Regulation by Register where Title Com§ 120. that the defendant (register) it would be impossible to have so many men as that for the reason that it would interfere with the current business of the office. etc.

In a Georgia case it appears that certain county books and records had been lost. it in the conduct of cor- They have never been published. . piecemeal. and the fur- nishing of such abstracts is carried on as a business for pay and profit. 359. The monopoly enjoyed by a closely sealed intelligence office would be broken and the losses inflicted by free competition would be instantly felt in the exchequer of the establishment." Their examination was denied.200 TRUST COMPANY LAW [§121 Private Abstract Books and Records as § 121. vital interest in maintaining the secrecy of these Ex parte Calhoun (1891). 694. 87 Ga. except as disclosed. They are its private its property and are used by porate business. Their contents are kept secret. and were afterwards purchased by this pri- vate corporation at great expense. Were the information which they afford rendered accessible to the public by other means. stolen or deIn an effort to reconstruct them a subpoena stroyed. if not destroyed. the demand for it through the one source now available would be diminished. There can be no doubt that the corporation has a 26. duces tecum was served upon the secretary and treasurer of the "Land Title Warranty and Safe Deposit Com- pany" for records of nearly like character to those that were missing. privileged against Disclosure under Subpoena Duces Tecum. except that they were "largely abbreviated and made up of characters and other symbols of tech20 nical signification. E. in furnishing to applicants therefor abstracts of title relating to specified parcels of real estate. the Court saying: "These abstract books called for by the subpoena came and into existence as the result of private enterprise labor. The value of the books consists mainly in the secrecy of their contents. 13 S.

485. both legal and moral. Y. And certainly its secretary is under a duty. Levitt (1907). Trust Co. Div. 106 N. 121 N." 27 name 27. . he ally liable to the title is not person- general rule other's company for their services.— §122] FEES 201 books as a repository of valuable information. 578. Sage (1911). Title Guarantee Title Guarantee & & Trust Co.pp. Supp. Y. v. 131 N. 146 N. thus acts as the agent of the applicant. Y. 28. 28 "When the principal is known the agent is not liable unless he has assumed a personal liability in clear and unmistakable language. meritorious as volved. 274. and where an attorney advised the company of his professional participation in an application signed by a corporate client. This was applied where a law clerk signed anto an application at the insistence of the company. Div. v. Y. As the attorney behalf of their clients. Apo. not to aid in killing the goose that lays the golden egg if he can help it." His claim of privilege if is therefore as his own personal property were in- Liability to Title Company for Fees § 122. Title searches and insur- ance are frequently applied for by attorneys acting in Sometimes these attorneys are given a percentage of the fees collected by the title company for bringing them the business. 147. A. Supp. Participation of Attorney.

CHAPTER XVII Corporations Practicing Law companies are vested with varied powers. there bility is In both aspects of this question necessary to be considered the moral responsi- of individuals independently of any relation of and agent. nor may it control the souls of its agents. but this must arise out of the direct mandate of law or on the principle ex aequo et bono as founded on contract or principal in violation of the rights of another. more in these things than other things are we to be mindful of the axiom that a corporation has no soul. however. It is a different thing. but where also personal qualifications are within the police power. As trust trust character. Preliminary. some of them of a purely business nature and others of a purely trust or a quasi§ 123. there is having a direct relation to legal matoften the entrance or attempted entrance is into the field of professional service or the pursuit of those callings. all ters. for relation it to attempt to impose an agency ence may where trust and confidence or skill and experibe demanded by an individual or by the state. . As an artificial creature of the law cannot act save through agents. There may be liability adjudged against a corporation according to theory of right and justice. where not only personal status to be considered.

not a lawful business except for mem- bers of the bar 1. (1910). Affirmed S3 U. from two of the members of by this court for office. does not A "While a corporation is in embrace a corporation. 40. with qualifications ascertained and certified after a long course of study. 1<is N. R. furis one licensed to practice either profession "much it more than an agent. . Y. and for it many ther." been said: As to an attorney at law has "He is an officer of the court. (N. a statute authorizes the formation of a corit poration "for any lawful business. yet is not such a per1 son as can be licensed to practice medicine. S. practice law or medicine. with all the conditions N.1 §124 PRACTICING LAW 203 Corporation Not a Person So Far As Licensed Professions Are Concerned.) 55. 3. 130. 483. holding his commission this court. 5:55. 55 111. W." 3 is "This to all (persons) is who wish But a corporation not one of such is persons." And. in this state." a business lawful to in it. Cas. 74 Neb. both general and professional. 479. said: Where means engage to all. E. 103 N. some sense a person. required to take an oath of office 2 and is privileged from certi- arrest while attending courts. Ann. 537. S. A. Matter of Co-operative Law Co. 673. who have complied v. State (1905). 92 1532 L. 12 A." fied to as to his He also must be moral character. purposes is so considered. 1078.' and subject to be disbarred what our statute calls 'mal-conduct in his He is is appointed to assist in the administration of justice. because "the practice of law not a business but is a personal right. State Electro-Medical Institute & E. limited to a few persons special of good moral character. The right to § 124. and a thorough examination * * by * a state It is board appointed for that purpose. In re Bradwell (1869). 2.

6. 697. Alba Dentist Co. (1901). Although can it generally has been held practice a corporation v." Generally it may be said that wherever a statute requires persons to be licensed to carry on a business. 103 Va. § 125. fol- lows that the practice of law for a corporation to engage is not a lawful business in. 8. 49 S." it In this case was also said that: "A corporation can neither practice law nor hire lawyers to carry on the business of practicing law for it any more than 4 it can practice medicine or dentistry by hiring doctors or dentists to act for it. that 4. It may be said then. . Com. As it cannot practice law directly. 107 Ky. 52 L. E. 60 Com. (1904). Statutes Regarding Practice of Law by Corporations. 597. 5. v. Y. 454. Com. (1905). rel. 167 N. 606." citing cases in the note. v. corporations are not embraced. E. (1908). Rep. 55 S. 13 Pa. As these it conditions cannot be performed by a corporation. 192 N. Y. Siegel-Cooper Co. it cannot indirectly by employing competent it. Harmon v. 85 N. lawyers to practice for as that would be an evasion which the law will not tolerate. Standard Oil Co. Crall v. ex. (1900). said: embrace a corporation. 244.204 TRUST COMPANY LAW [§124 required by statute and the rules of the courts. N. in a statute The words "any person" practice of dentistry do not regarding the 5 was ness. 1038. "The company cannot be examined as to it It fit- and therefore cannot exhibit a license * * * in and to say that a corporate body cannot be examined is respect of qualifications to practice dentistry only say- ing that the act necessarily contemplated natural persons only. that generally it is contrary to public policy that a corporation should be allowed to practice law. E. R. 855. A. 432. W. Dist. neither law nor People Woodbury Dermatological Inst. 429.

(6) to render any kind in actions or proceedings of (7) in any other any nature. where corporations may have others 7 sought to make a business of representing through their agents before the courts Or in supplying legal advice or services to others for a consideration. has been found necessary such practice to sustain to supplement public policy by makinglegislation hardly malum prohibitum. ch. legal services of (5) to furnish attorneys or counsel. yet. malum in sc it is clearly within the police power of the guarding of the ad- ministration of justice or the protection of the public welfare. and comment thereon in 81 Central Law Journal 4. (2) to make it a business to practice as an attorney at law for any person than itself in any court. manner to assume to be 1915. ch. The most notable of such legislation is a New York statute of 1909. amended by Laws 1911. (3) to hold itself out to the public as being entitled to practice law. Laws 1909.law very useful as a guide in other states. 483. especially as to the former. 1913. This statute (Penal Law. made unlawful for a corporation to is do in the way of practicing. 317. (4) to render or furnish legal service or advice. 254 and 1916.§125] PRACTICING LAW it 205 medicine. 254) is subdivided into various parts as follows: (1) To practice or appear as an attorney for any person than itself in any court or before any judicial body. See also "Unlawful Practice Act." Missouri Session Laws. ch. ch. Since its enactment it frequently has Its specifica- come before the courts for tion of the things construction. 7. §280. state in the needs that the act denounced be considered it. . This because apart from that.

use or adverentitled of lawyer or attorney at law or equivalent it terms so as to convey the impression that counsel. . at In construing the terms of this statute the disposition of New York down courts is to refer back to the princase. tise the title (8) to assume. 22 Geo. 46. conducts 1 or maintains an office for the practicing law or for furnishing legal advice.206 TRUST COMPANY LAW [§125 entitled to practice law. or to furnish legal advice. service or (9) to advertise that it has. knowing him not to be duly qualified. 7 By this statute it is declared any sworn attorney or solicitor shall permit or name to be any ways made use of upon the account or for the profit of any unqualified person or persons. Sec. and to forbid corporations. or as being asso- any individual in his capacity as an attorney Just here in order to understand the common law standing of an attorney to the courts it is well to recite a statute in force in England at the time of our Declaration of Independence. not only practicing law. and (10) to solicit claims for suit or of representing an attorney law to any one sued or about to be sued or affected by any suit or proceeding. act or practice in any respect as an attorney or solicitor. Ch. ciples laid in the Co-operative Law Company supra. services or counsel. thereby to enable him or them to appear. owns. 2. from holding themselves out to the public as having the right to practice law. * * * every "that if suffer his the roll such attorney or solicitor so offending shall be struck off * * * and * * * it shall be lawful • for the said court to 7. is to practice law. but also ciated with at law. commit such unqualified person so 11.

. . Plaintiff was denied recovery because of the illegality of the agreement. 9 There was a rule against both and it was made absolute. 9. The facts in this case greatly reIt semble what a corporation practicing law would do. It was ruled to be of force in Canada.. In re Jackson and also. :i etc. 269. whereby the latter was to be admitted to partnership with the former after being admitted to practice. striking Jackson off the roll and committing Wood make to prison for it one month. "This case showed an agreement between an attorney and an articled clerk. was and said : "Wood received instructions from the clients were instituted and carried on in consequence of such instructions. 1 Barn. knowing him not to be duly qualified. v." 10 It profit would seem reasonable. Clark et al. there being a dis- agreement between the two. 11 U. C. Ch. a person not duly qualihis as an attorney. notwithstanding that as to England it had been repealed by 6 and 7 Vict.to the prison of the said court for any term not exceeding one year. C. 73. the profits of the business to be computed from the beginning of his services as clerk. In re Wood. P. therefore. to conclude 8." There is no reason to suppose that this statute did not become a part of our common law. they separated.'' Jackson was charged with "havsuits ing acted as the agent of fied to act Wood. on account of and for the of Wood. Dunne See O'Reilly (186?). 10. Dowling & R.. and the clerk sued for his interest in such profits.§125] - PRACTICING LAW 207 acting or practicing. 260. In an English case an attorney engaged a certified conveyancer to conduct his business and allowed him a share of the profits instead of a salary.. 404. and having permitted name to be made use of.

Purdy (1916). this ruling being under the statute forbidding the practice of law by corporations. undoubtedly was aimed at natural persons and. 1915. Y. v. is way about. plainly there was need for punishment of the corporation. however.125 needed to make it an offense on the part of an unlicensed person to have any agreement with that no statute a qualified attorney or solicitor to practice law. That corporations engaged in securing tax reductions are unlawfully engaged in the practice of law. Supp. The case concerned the representation of creditors in bankruptcy proceedings. v. Supp. But as said above. In such case ney or the corporation is but the representative of the agents instead of the other therefore. The English statute. 162 N. 38. 152 11. while it may have been broad enough to call for disbarment of any qualified attorney or solicitor having such agreement with a corporation. 913. Supp. whether a licensed attorney or not. The corporation's name. The rule of policy declared by this statute and incorporated in our common law solicitor is just as much offended by an attor- having an agreement with a corporation that must be carried out by its agents as it would be were the agreement with the agent themselves. see Peo. may join this aggregation. merely the legal entitling of an aggregation of individuals.208 TRUST COMPANY LAW is . 70. Y. it is denounced by the statute. See also opinion of the Judge of a trial court of Kentucky in Grocers' and Merchants' Bureau (a corporation) v. p. National Jewelry Board of Trade (1915). N. Y. Therefore a very recent ruling by New York Supreme Court in Appellant Division as to what constitutes the practice of law is very interesting indeed. we hark back to common law principles to construe the meaning of statutory terms forbidding corporations to do the things specified thereby. 56 and 162 N. Gray (1915). American Legal News for March. 11 . matters in which it forcibly could be claimed that there was merely a business propMeisel & Co. and as any one.

" Sec. the preparation of legal instru- ments of all kinds. and : in addition conveyances. The court relied on decisions showing what constiit tuted practice of the law. In re Duncan (1909). 13. C. pronounced judgment accordingly. 195. 25 L. and having ascertained that. 183. It was said "According to the generally understood definition of the practice of law in this country. it embraces the preparation of pleadings and other papers incident to such actions and proceedings and the management of such actions and proceedings on behalf of clients before judges and courts. formal presentation of claims. ." 14 formalities. See also Thornton on "Attorneys at Law. negotiations or proceedings 12. and there it became of importance to define the practice of law.§125] PRACTICING LAW 209 coming up in every day life. 65 S. 83 S. it was in furtherance of the working of an administrative law that creditors be at liberty to select a common agent. 69. 621. E. there being no possible conflicting interests between creditors of each class. Thus it cited a case where the question was whether a disbarred attorney was practicing law while dis12 barred. osition to concern collection agencies. Ward (1SS0). Savings Bank v. that "Persons acting professionally in legal by the warrant or authority of their clients may be regarded as attorneys at law within the meaning of that designation as employed in this country. Nat. ed." By the United States : Supreme Court. and where forms to be followed and the exercise of good business judgment came very much more into play than any need of legal These things might be thought particularly learning. ISO. and in general all advice to clients and all action taken for them in matters connected with the law. 14. 100 U. 210. S. 13 it is said generally. and.

210 TRUST COMPANY LAW [§126 In Indiana. through lawyer agents. although such matters may not be pending in a court. their rules forbid the practice of law therein except by those to practice who are entitled law in state courts. 836. places both them and their agents predicament of violating the law. It is to be said also that this case holds that so far as federal courts are concerned. Such construction would sel. known rule in regard ance of common law principles. but for what they imply. Agreements by Attorneys with Un§ 126. 34 N. and the agents as violating the common law rule itself. E. . qualified Persons a Common Law Offense. 535. App. the corporation by force of the statute. 7 Tnrl. especially we must resort to the is common understanding in what the practice of law poration in their construing statutes regu- lating the qualifications of attorneys." Certainly it would seem that no rule of construction in a narrow way could be applied successfully. amendatory of the common law rule. especially such as wills. 15 it was said that: "In a large sense it (the practice of law) includes the legal advice and countracts and the preparation of legal instruments and conby which legal rights are secured. 529. except that by comity an attorney of another state or county may be permitted to appear in special cases before the court. Miller. I have 15. where there is express prohibition against an institution for the commission of an act that is malum in se. Apparently a corpreparing legal documents. Eley v. in their in the all the expert knowledge required management. and advertising that estates may obtain. The above decisions are not offend a well that to statutes in further- only useful for what of they directly decide.

1. but not specifying the date from which the written and unwritten law of England ceased as new law govern us. 496. 58 Ark. Y. 1776. 1775. 371."" and Nevada. 1S92. 35 L. 7S Mo. Art. (1896). 149 111. 24 S. 3 X. A. Sec.. Holloway v. as the line of demarcation. many. there 10 17 18 are Florida.. •: L. 36 X. 18. 10 21 emigration.. 47 Am. 391. §126] ATTORNEYS 211 22 George II. R. The cita- tively. r> Harr. Sattig v. It. 9 Pac. L893). Const. which date would not exclude the act in the twenty-second year of the reign of George L6. 983. R. 40. but The New York constitution are used illustra5 fixed April 19. Other states speak of laws of England in force at the time of our . this is only true as to those of our states which adopt as part of our common law.1. 165. 46. to ute and decision there is variance as to this. I Clausen v. the fourth year of James 2 ' 22 I. Stat. Gen. v. Kan. Hardage Stroop i . 643. General 9 Am. Kreitz v. Small (1862). :.»•. that tions is I to say. 46 Ind. r>S4. Crandall (1SS:0. Ch. Ch.'. 22. 653.rA. W. Browning v. R. or rather not un- our conditions as they existed at the time of our separation from the mother country. Chilcotl v. 19. to show that agreements of attorneys and solicitors with unqualified persons in the practice of law concited Statute stituted a common law offense in the absence of statutes specifically lish covering what was provided for by the Engstatute. v. l . 1 Nev. 45 Pac. Dasliidl 20. 21. applicable.>:. But it may be said. 126. Of the states adopting the common to law. o. 23 Cole 40. & . L6. 23. Atty. I. 62. 190. to-wit the fourth year of the reign of James I. R. S. E. Rhode Island. and taking the line of demarcation to be July 4. 59. 303. v. which became a law in 1760. Fla. II. M. such English statutes. Dec Hamilton v. fixing an anterior time. if not the majority of states. A. 307. Pel. 677. Behrensmeyer (1894). 17. seemingly Delaware. 3. Both by stat suitable. 59. Primro-c (1873). Mexico. ( :'. Browning (1886). 1822). Rep.". make are not exhaustive. Sec. Porter (1874). Ncwland < (1sr. and generally they place this date at 1607. Ch. N.'. New Maryland. S. Hart (1894).

was intended to provide at 24. 24 it w as provided that r "none should from thenceforth be admitted attorneys. on examination. or otherwise well practiced in soliciting causes. 7. unless he should have served. that an attorney could surrender his judgment and independence to another in the practice of his profession." In Tidd's Practice 35 it is stated that: "In con- firmation of this statute. 3 Jac. by the space of five years. would seem to be impor- tant. found of good ability and honesty for such employments. practis- ing counsel. but such as had been brought up in the same courts. C. Rather should it be thought that the Statute 22 George II.. attorney.212 TRUST COMPANY LAW f § 126 To ascertain then whether the policy declared by this statute inhered in English law at the time of the settlement of Virginia in 1607. a rule of court was made. clerk or officer of one of the courts Westminster. ." This author then recites that matters stood thus until the statute of George II. that there would be no common law offense in this country and in a state where the rule is that our common law is only such as applied to our settlement as colonists. or lower the confidence reposed in liis skill and personality. I. that none should be admitted an attorney of this (King's) court. of which I have above spoken. sergeant-at-law. but scarcely may it be thought in accordance with usage and tradition. and were also. and had been found by their dealings to be skillful and of honest dispositions. along with consideration whether that policy was applicable to our condition. The year in prior to this time. Stat. as a clerk to some judge.. and not during colonial life. any of the King's courts of record at Westminster. It may successfully be urged.

by Chitty. in the case. cannot be doubted that as states recognizing our common law as embracing English statutes applicable to our condition at the time of our separation. such representation I is 18. 22 X. V. and it is recited that beginning with a statute fourth year of the reign of Henry IV." In a rather early New York case. also well appears from a discussion by our federal supreme 7 court. or otherwise punish him. and that according to the course of law prior to such 25. qualifications and character of attorneys. or other regular and ordinary business of an attorney. and again in the third year of the reign of James I. 552 . Ed. p." it We to all think. 107 V. roll.""' a most interesting discussion of the admission of attorneys to the bar. Thus it has been laid down that: "The court will. 27. S. also prior to In this this time. Matter of Application of Cooper (I860). interfere in this (a) summary way to strike an attorney from the gross misconduct. ed.1 §126 ATTORNEYS especially 213 a remedy against abuses. more than 200 years prior to the settlement of Virginia. but where it has arisen not only in cases any other matter so connected with his professional character as to afford a fair presumption that he was in employed in or intrusted 25 with it in consequence of that there is character. :27 1. 26. English law controlled this subject. in general. 265.. for where the misconduct has arisen in the course of a suit. therefore. statute. it is a common law offense for an attorney to represent a corporation in the doing of legal business for a customer. Archbold's Practice. when the eases I have instanced indicate that procedure thereunder was summary and not by regular jury trial. that these old statutes were looked to to ascertain the rights and privileges. 67 Ex parte Wall (1883).

A corporation is therefore qualified to act in such a capacity. Law Cannot Take Advantage of its Illegal An attorney retained by a corporation legal proceedings for third per28 was held liable to account to the corporation. E. statute against the corporate practice of law as constituting an offense mala prohibita and not mala in and the purpose and effect of this law to be "to preserve an ancient and honorable profession 'of the highest usefulness and standing. or in examining a title.214 TRUST COMPANY LAW [§127 against the spirit of the common law. . Ill N. is but an application of the principle that no man shall by his own wrong. Distinction as to Corporation Furnishing Services to Attorneys at Law. 828." § 128. v. App. affirmed Brown in (1915). It has always been permissible for counselors and attorneys at law to employ an unlicensed person as an assistant or clerk. Y. or with its aggregated power. which had undertaken sons. to the end that he should keep moneys which are not his own. The court could not uphold the attorney "in his vindication of a law which he too broke. Div. Practicing Attorney Appearing for Corporation Conduct. When a trust company assists an attorney in drafting a will. so to speak. United States Title Guaranty Co. though very prob- ably not indictable as such. without question. and which. it is but acting 28. § 127. Y. acting as a middleman. between and attorney. in organizing or reorganizing a corporation. 088. Y. 166 N.' from the inroads of a legal entity that could neither qualify for practice nor dis- charge such personal obligations of trust and confidence. The court speaks of the New York se. 4708. 152 N." profit This. Supp. (1916) N. of course. might destroy the relation of and attorney.' one which 'involves the highest trust and confidence. might client client affect the individual independence of the bar.

An example of such confirmatory legislation is found in the amendment to Section 280 of the New York Penal Code enacted by the 1916 Legislature (Chap. When he employs a corporation to assist him he but substitutes trained and organized for untrained and perplexed assistance. that at times the lawyer receiving such information or such services shall main- and direct responsibility to his clients for the information and services so received. Recent legislation on this subject may therefore be regarded as merely confirmatory of the common law. 'This amendment is as follows: shall be construed to "Nothing herein contained prevent a corporation from furnishing to any person. It is useful. 254. Laws of 1916). Massachusetts excepts corporations "lawfully engaged in tain full professional assisting attorneys at law to organize corporations" as the terms of this act banks companies are permitted to give legal advice on investments and taxation. client." From its "Act to Prohibit the Practice of Law by Corporations" (Chapter 292. The company assumes no - layman Counsel assumes the professional obligation of personal morals and learning involved. General Acts. well as title companies. such infor- mation or such sional clerical services in and about all his profes- work as. however. may be lawful. except for the provisions of this section. provided. 1916). But no corporation shall be permitted to render any services which cannot lawfully be rendered by a person not admitted to practice law in this state nor to solicit directly or indirectly professional employment for a lawyer. By and trust .§128] SERVICES FOR LAWYERS 215 relation to the as his clerk. lawfully engaged in the practice of the law. in clearing any doubts that may exist in the minds of those who look upon statutory enactments as all-embracing.

printed in the last pages of the ap- . namely. The purpose involved. laws of § 129. or by furnishing security to a foreign court with reference to a particular trust. whose stock owns or All of these things turn. or it may it operate through a domestic corporation indirectly controls. trust the domiciliary state which limit the right to operate branch offices. very largely. It may be required to qualify as a foreign cor- poration generally. upon statutes. and laws of foreign states or countries which deny or prescribe terms' for the admission of foreign corporations. The doing of business by a company at points other than at its home office encounters two classes of legislation.CHAPTER XVIII External or Foreign Business In General. The necessity of compliance with these laws rests upon the character of the activity contemplated or performed in the foreign state or country. of this chapter is to discuss the principles A guide for admission of foreign trust comis panies has been compiled in alphabetical order of the various states and pendix. or under laws particularly applicable to trust or other fiduciary companies. The method of compliance will depend upon the laws themselves and the extent to which the company desires to operate abroad.

ciliary state 3 Branch Legislation of the domi4 or of the foreign state may by limit or proa trust hibit the establishment of branch offices com- 1. 1 As to formalities of proof in foreign states of right 1% to act as fiduciary. 619. page 326. the capacity of the trust company "The to take such a trust : was attacked. to recover on a policy of § 130. Y. of Rochester v. 223 i '. Presumption that Trust Company has the Power to Execute a Trust in a 2 Foreign State. v. Y. Harmony Fire and Marine Ins. 2 88 S. Sec. see the case cited." § 131. . Div. E. 450. Farmers' Loan & Trust Co. Sickles (1908). 51 Barb. V. In an action brought by a New York trust company in possession of a railroad in Wisconsin. 3. . but it is interesting to note that a corporate client from a foreign state will not be "doing business" in the trust company's state by employment of the trust company. L25 X. V/ Central Trust Co.facie insurance for the burning of a dredge boat fastened to the wharf of the railroad company. (1868). Thus it has been ruled that the making of a collateral trust mortgage does not bring the debtor corporation within the restrictions applicable to foreign corporations. they Jiad pozuer to undertake. Sec. Appendix New York Banking Law. utes of that state. 33. 2.»"> New York Banking Law. Co. which by their charter Offices.§§130-1] BRAN( II OFFICES 217 We are merely concerned in this work with the status of the fiduciary company. affirmed without opinion in 41 X. 262. to the contrary. 4. 105. 109 N. under mortgage foreclosure. of Illinois v. Appendix page 302. App. Hearne (1916). West Virginia. Union Trust Co. Supp. Of this the court said (italics supplied) act of incorporation fully authorizes a trust created by deed such as this was. zvc Whether they could hold real estate in Wisconsin would depend on the statIn the absence of any proof of a law authority to must presume that the company had execute the trust. Prima.

of. Farmers' Loan and Trust Co. so that a claimant ited to the assets of a particular branch. Smith (1902). post. (1913). under the comity of nations. may be implied. The corporation being a nonresident. 6. Wash. The several branches lim6 are not considered as distinct. But see legislative change since this decision in Appendix . 51 Atl. 152 Pac. 989. 625. Ch. 6% . W.: 218 TRUST COMPANY LAW [§132 pany. it was held that "The corporation thus created might well do business.. it might be is proceeded against by attachment. Power to establish such offices. of Krumm. 2 Tenn. Freedman's Savings and Trust Co. Civ. — Need of Special Laws for Admission in Some States. Bank v. 122. Y." there It was the further opinion of the court that was no reason why depositors of the Nashville branch could not bring action in the state courts upon insolvency of the company. . Thus with respect to the Freedman's Savings and Trust Company. C81. 74 Conn. Seattle v. 609. App. 2 / Union Savings & Trust Co. and which had established 5 branches in various states.. Tex. 155 Hadley v. see the case cited. 6l 7. First Nat. an executor or administrator unless "as incident to the it followed that a foreign (1874). in any state in the Union in which the business was in other respects lawful. S. Exclusion of Foreign Trust Companies that as foreign corporations could not be admitted to do business in that state for purposes not permitted to do- mestic business corporations. v. however. and domestic corporations could not be organized to transact the business business of a trust company/' 5. in the absence of restrictive statutes. of N. The Supreme Court of Errors of Connecticut has held 7 § 132. incorporated in the District of Columbia under act of Congress. As to the powers of the manager of a trust company branch.. Union Trust Co.

97: Since the rendition of this opinion the New York law has been amended so as to provide for admission of foreign trust companies as executor or trustee under a will. Although the corporation involved in this case was not a trust company. was also denied. — —by the ab- to allow all foreign trust New York Mortgage Co. To admit this foreign corporation by mere compliance with the general foreign corporation laws would. but not for foreign corporations of the class seeking qualification. 92 X. Official supervision and control was provided relating exclusively to trust. W. in the mere absence of prohibitive legislation. give the foreign corporation an unfair advantage. N. Act 108. MlSC . 223. X. 15 X. A New said: York case 10 held that a foreign trust com- pany was not authorized to act in fiduciary capacities. Secretary of State (1907). 114 9. and operate as an imposition upon the citizens of Michigan. Banking Law. deposit for them. 150 Mich. Matter of Avery (1904). Supp. It said that "banking corporations and those corporations which are within the contemplation of our banking laws are not trust company could not act as within the provisions of the act authorizing foreign corporations to transact business in this state. Appendix page 326. The court "It seems almost like impugning the it intelligence of the Legislature to presume that intended sence of prohibition alone 8. the language used by the Michigan Supreme Court would seemingly include foreign trust companies in the class to which admission would be denied. as amended. 1889. 529. Mandamus by a mortgage company organized under the banking laws of New York to compel the Secretary of the State to issue a certificate entitling it to do 8 business in Michigan. 197. v.§132] FOREIGN BUSINESS 219 an executor in that state. 82. in the opinion of the court. 10. Y. V. Sec." Michigan trust companies are organized under laws and security companies. V.

American Loan & Trust Co. which. because to do so. it enables them to come here and execute such trusts without ob- taining permission from our state authorities. may be ordered by the court. The statute in question read as follows 11.. without subjecting itself to the vis- itorial powers or the power of control of any state de- partment. 242. 222 Fed. Co. and when clothed with authority to act by the court. and without safeguarding the rights of our any manner save by giving a bond. v. 694. whom process may be without maintaining any office or having an located here. . without designating any person upon served office . Taking Possession of Property and Operating It Might Require Qualification. and Martin v. Ariz." § 133. an attempt was made to defeat an action by a New York trust company to foreclose a trust deed on an Alabama railroad. on the ground that the trust company had not qualified in Alabama as a foreign corporation. to as a matter of right. (1889). with the measure of their sponsibilities fixed in and re- by the laws of their own creation. to take itself and the property of the estate committed to its care to its own domicile beyond the jurisdiction of citizens in with doubtful authority the court. Tallassee Falls Mfg. Bankers Trust Co. (1910). East & West R. ship Mere Acceptance of Mortgage TrusteeWithout Action Under Trust Deed Not Doing Business in Foreign State. 37 Fed. In a case " before the United States Circuit Court for the Northern District of Alabama. authority to execute such trusts. Co.: 220 TRUST COMPANY LAW liabilities [§133 companies. v. if the position of counsel is correct (that they have such right without complying. 87. (1915). See also Continental Trust Co.with our statutes to enable them to do busi- come here and demand ness in this state as foreign corporations). 156 Pac.

because it has accepted the trust under the trust deeds issued by the East & West Railroad Company.: §133] FOREIGN BUSINESS 221 "No foreign corporation shall do any business in having at leasl one known place of authorized agent or agents therein. Perhaps. It is to be doubted much whether the transaction of its legitimate business in the city and state of New York. unless de interest. in the sense of the constitutional article. and apply the proceeds of such management to the payment of interest on the mortgage debt. The is provisions of the trust deed. doing business in Alabama. and manage and operate the same for the account of the bondholders. as pro- fault shall be made payment of vided by the trust deed." Of the plea seeking to defeat the action. but avers that it is a foreign corpora tion. which is made the basis oi the foreclosure suit. if this provision of the . has accepted the trust from the East & West Railroad Company of Alabama. when it accepts a trust there- after on a contingency to be executed in Alabama. and has no known place of business nor authorized agent within the state. the trust deed provides several lines of procedure upon the part of the trustee in the execution of his trust. In case of default. do not indicate that any business to be transacted in Alabama by in the the trustee. on the part of the American Loan is & Trusl Company. One is that the said trustee may enter into possession of the said railway line and property. the court said "This plea does not aver specifically that the American Loan and Trust Company is doing business in the state of Alabama. and an and business such corporation may be sued in any court where it does business by service of process upon an agent anywhere this state without in this state. the inference seeming to be that the said company is doing business in this state.

See Martin v. E. Individual and Fiduciary Capacity. 97 N. Jankins & Reynolds Co. 13. to provide at least one known place of business and one authorized agent. E. v. Ariz. Such passivity 12 is the negation of transaction of business. 56 N. 480. 14. and selling it. it. Alpena Portland Cement Co. & Trust Co. Foreign State. so as to bring operating collecting rent the conventional corporate plaintiff or defendant within the penalties and prohibitions of foreign corporation laws. by passively continuing to hold a previously existing and valid lien or title. 244 111. — such managing and and income. v. (1900). and would then be compelled. but the trustee never assumed to exercise the active 13 trusts and powers attempted to be conferred. W. 87. Chicago Title 940.. in compliance shall take possession of the railway line with the constitutional article. 184 111. 91 N. 156 Pac. 255." The Supreme Court of Wisconsin has also decided that a trust company is not "transacting any business in that state.222 TRUST COMPANY LAW [§134 trust deed shall be acted upon. Morse v." it And in Illinois was held that certifying to the bonds by a its New York Trust Company at foreclosure in Illinois home office and bringing suit for was not the assumption of an come within the stat- active trust in that state so as to ute. Merely prosecuting or defending suits in a foreign state do not constitute "doing business" therein. Holland Trust Co." Right to Sue Without Qualifying in § 134. 281. because this is not the "ordinary" business for 14 which such corporations are created. the trust company would then be doing business in Alabama. and the trust company and operate the railway. 354. 369. Bankers' Trust (1916). It was said that : "The trust deed in this case pro- vides for active duties in the execution of the trust as taking possession of the property. nor is it a right which is dependent for its existence "upon authority to 12. (1910). . 120 Wis. Bashford (1904).

v. Civ. However. 242. It is exercising rights depend- ent upon its special powers. E. See also American Loan & Trust Co. (1905). 15 The court said: "It cannot be successfully contended that the bondholders would not be permitted to bring this action in their names. W. 56 N. Misc. Royal Trust Co. fact that the trust company was e. since the ordinary corpora- tion could not bring or defend litigation for cestui que tnistcnt. Commercial Telephone Co. 38 Tex. Holland Trust Co. (1900). 16." The Supreme Court of Wisconsin has held that the "mere commencement and prosecution" of a mortgage foreclosure suit is not the transacting of business in the forbidden sense. 940. (1889). When trust companies sue as statutory assignees. individual bondholders. App. though this It is may not be regarded as "ordinary" business. 184 111.. Eas1 & West R. and Morse v. . 369. 78 X. 281. for which for which it is it is transacting business created. Chicago Title & Trust Co. 86 S. who were themselves not subject to the disqualification imposed by the foreign corporation law. And. 255. i. v. W. 120 Wis.§135] LOCAL LAWS 14 223 transact or engage in any particular business. Bashford (1904). 97 N. Territorial Bank & Trust Co. v." This reasoning would apply to a trust company when suing or defending in its own behalf. But the process of reasoning by which this conclusion is reached does not appear outside of the citation of cases holding that gation in its liti- own behalf is not the "doing of business" by corporations generally. Co. 37 Fed. the very acting for others. but when it brings or defends litigation for others. 309. 192. 17. v. we know of no sound reason which would prevent their bringing it in the name of the trustee 16 for their benefit. Harding (1912). was regarded as sufficient to excuse the corporate trustee from qualifying in a Texas foreclosure suit.. 17 15. it the performance of service may charge. 66. this being true. V. .

reversed in 177 U. but in this regard they are not from individuals acting in like capacities. 067. because jurisdiction had first attached in the federal court. Bauerle (1892). for Insurance on Lives v. E. . this decision. Ct. Complying with Local Laws. as understand it. R. 9 Mackey (20 D. The speaks of an act of Congress in regard to "trust. Lake St. S. 20 S." and the laws of Illinois are spoken of as those "in relation to trust companies. Co. 173 N. 459. 44 Law Ed. mortgage and certain other corporations within the District of Columbia" and their becoming executors. Reps.) 315. is that even where a trust company may act in another state. 55. 51. administrators. Farmers' Loan 111. without the execu- & Trust Co. EI. C. 439. 33 N. 51 166." As perhaps sufficient on this subject is a case 19 by the court Supreme court of the District of Columbia. Co. The co-trustee of the Farmers' Loan & Trust Company was an Illinois corporation bearing title. There would be security demanded from an individual offering himself as trustee and comity extends recognition to the foreign statute. it will be held to be doing I business in the latter state because the law of state regards this as its own doing business and the local statute must exact for its own citizens the same measure of security as would be required thereunder. 143 111. The Illinois supreme court ruled that when The Farmers' Loan & Trust Company of New York proposed to act in that state as a trustee with active duties to perform. Deposit of § 135. (1898). v. See also 564. Securities. though in a purely fiduciary capacity. 19. L.224 TRUST COMPANY LAW [ § 1 35 they are entirely dependent upon the comity of the courts in different which they appear. Re Margaret Turley (1891). guardians or trustees. 18. it must comply with the local 18 The effect of act requiring the deposit of securities. "American Trust and Savings Bank. loan. Penn.

corporation tenders itself read}' to its due performance of the Nor do I see that the execution of the trust cannot be performed by consist corporation. It ground that the trustee is is a foreign corpora- said. should they be paid over to the foreign corporation. Eq. This act speaks of no bond being "required from any trust company incorporated under The court held that "when they came under law they surrendered their powers and authority derived under their original incorporation. in support of the petition.§136] \s FOREIGN EXEI UTOR 225 tion of a bond. held: 20 "The question propounded will it is not whether this court appoint this corporation as a trustee. ." this capacity. 47 Ail." and must comply with the local act before acting in any fiduciary this act. culty in see no diffi- providing for the retention of jurisdiction sufficient to secure the execution of the trust: for the give security for the trust in this state. 60 X. for the appointment of a new trustee in the place of a Pennsylvania trust company appointed by the will. Upon petition by executors of a New Jersey estate to the Court of Chancery of New Jersey. 347. but whether will say that the trustee selected by the testator shall be set aside. that this court will have no jurisdiction over the trustee or over the fund. in the The duties of the trustee merely paying over of sums of money which can in this state. upon the single tion. 2~::. In re Satterthwaitc's Estate (1900). the vice-chancellor § 136. be either paid in Pennsylvania or 20. and the trust committed to another. Tt is also said that that corporation has no I right to execute the trust within this state. Foreign Trust Company Qualifying as Executor by Giving Bond and Appointing Agent for Service of Process with Respect to a Particular Estate. J.

all vouchers or securities in possession. S7. it and by producing any and its obey such order by filing its account. the court of chancery." of Non-compliance by Trustee Restrictive legislation upon Validity of the Trust. (1916). See Bankers' Trust Co. Equity never allows a trust to fail for want of a qualified trustee. in addition to the ordinary conditions of such a bond. belonging to such trust estate. shall contain a condition that. before said court. Trust Co. Co. is and it will not hold a trust invalid because the trustee in default. Ariz. v. 28 Fed. (1884). 21 In such cases. 156 Pac. as surety which bond. upon the rights and powers of foreign trust companies go to the qualification of the company to accept and perform the trust in question and do not affect the validity of the instrument as a whole. & . with a New Jersey corporation. These general principles have been applied in several cases where trust companies acting as mortgage trustees have failed to comply with foreign corporation laws. 369. v. or before a master appointed by the said court. the proper remedy is removal of the disqualified trustee. Hervey v. and the appointment of a new trustee 21. R. to make and state an account of the same. Farmers' Loan 412. also that the New all shall be the Jersey corporation so signing as surety agent of the trustee to receive and accept notices service of § 137. made to the chancellor of the state of New Jersey. E. qualified to act as sureties. and obey all orders of the said court in respect of said trust. whenever an order to shall be served upon the foreign corporation account before the orphans' court of Burlington will county. 255. 184 111. (1895). Effect and orders in respect of said trust. or the prerogative court of this state. 56 N. Co. Chicago & M. P.. Morse also Martin v. 68 Fed. 169. 226 TRUST COMPANY LAW [§137 My Deposit conclusion is that the Company shall Guaranty Trust & Safeexecute and file a bond.. Illinois Midland Ry. Holland Trust Co. (1900).

Y. 173 111. and the court having obtained jurisdiction of the parties. R. 73 N.: : §13S| ixi. 56 N. United States Trust Co. that "The trust fund and its administration being here. S. it was held by the Appellate Division. or in the absence of such provision. In an action brought in the Supreme Court of New York by the Farmers' Loan & Trust Company of New York for a judicial settlement of its accounts as trustee under the will of a resident of South lina. . 330. which was probated trust appointed a New York company trustee of certain personal property for the benefit of The principal point decided in the case was that as the will was valid according to the laws of Rhode Island. Div. v. 1S4 111. First Department.ii rOB FOB NON-BESIDEN1 22/ under provision in the trust deed. U. an action was not maintainable in New York to have it declared invalid. Co. The as will of a resident of in that state. El. App. Farmers' Loan & Trust Co. E.)" The case thus cited involved an 2t action brought to have a testamentary deposition held invalid as violating the rule of New York Rhode against perpetuities. Y. Lake St. Cross v. 27 Am. it may properly exercise jurisdiction and direct how the fund shall be distributed and its decree. Farmers' Loan & Trust Co. Rep. 131 N. v. 1. (1900). 23. Co. (1892). 606. St. Jurisdiction over Fund Held by Domestic Trust Company under a Will Proved in a Foreign ~3 State. A. Supp. 475. 51 N. when complied with by the plaintiff. Island. 15 L. 125. E. 30 N. 439. 255. 67 N. R. Y. With relation residents of New York. E. to the capacity of the trustee. Y. Holland Trust Co." § 138. Cam which had been probated in that state. 597. will relieve it from further liabilitv. 131 N. Ferris (1901). Morse v.. 330. 24. 55. the court "It remarked may be doubted whether the corporate powers 22. T. by the court. (Cross v. the trustee being a corporation of this state. (1898). 369.

but § 139. D. Washington Oregon Corporation (1914). it appears that summons was served upon a director of the trust company in New York. ch. 27. Process upon Director of 27 brought in Foreign Trust Company. Chicago Title & Trust Co. 217 Fed. 26 in contravention of Amendment to the Federal Constitu- forbidding the deprivation of property without due § 140. 281. There is no rinding or request to find on that subject. v. 97 N. incidently. 588. 801. ch. Chicago Title & Trust Co.) But though that question has is come in. (Laws it 1853. (1913). 144 N. . 120 Wis. Y. W. Fidelity Trust Co. C. This is not an action to no allegation in the comact and no relief is asked on that ground. A would render them confiscatory and the Fourteenth tion. In an action New York against a foreign trust company. Y. it is remove the plaint that There is incompetent to on the argument. Bashford (1904). 839. process of law. Prohibitions against foreign trust companies holding or disabled. American Security & Trust Co. Of this the Service of court said: "The service is sought to be sustained by virtue of 25. 281. Div. v. App. 940. 940." Statutes not Retroactive. Laws 1863. The proper court would not allow the trust to fail because the trustee is would appoint a new one. not properly before us. v. The want of corporate capacity in the trustee to act would not be fatal to the trust. 204. 60. 97 26.22^ TRUST COMPANY LAW [§§139-40 conferred upon the trustee in this case are broad enough to authorize it to execute a trust created as this was. Supp. 120 Wis. N. 159 N. as executor and trustee under the will of a resident of Washington. Bashford (1904). trustee. Hansen v. Restrictive disposing of property in a trust capacity apply only to property acquired or business transacted subsequent to 25 contrary construction of such laws their enactment. W.

67 Fed.§141 PRO< I l S£ WJENT 229 the provisions of Section 1836a of the Code oi Civil Procedure. Civil Procedure. In Yeomans v. is however. Service on one of the directors of the appellant. and 'the corporation has property within the State. whom they compensated by commission. principal place of business in Minneapolis.." question in the case was whether the trust company could be sued in Massachusetts bv a citizen of Xew York after agent that it 28. subd. 3. filed by the corporation pursuam Code of to the provisions of Section 16 of the general corporate m law is not in force.' " No attempt was made to had any property York. 28 it appears that a Minnesota trust company. or. Minnesota Title Insurance & Trust Co. Continuance of Authority of Agent for Service of Process after Withdrawal from State. the only authorized by Section 432. or the cause of action arose therein. the trust company filed in the office of the commission of corporations for the commonwealth of Massachusetts an "Appointment of Attorney for the State of MassachuThe setts" and a "Foreign Corporation's Certificate. having its r The motion § 141. 282. . of which provides that it may be so made if a designation of a person upon whom service may be made. in the State. ( 1895 ). which appear to give our courts jurisdiction in actions by or against a foreign administrator or executor. Upon the representation of this was necessary from a legal point of view. sold mort- gages through an agent in Boston. if the officer specified in person so designated or an subdivision 1 of that section cannot be found the exercise of due diligence. show that the defendant and the plaintiff failed to satisfy the court that the cause of action arose in New to vacate the service w as granted.

as any liabilities remained outstanding in Massachusetts and that nonresidents could avail themselves it of the same legal remedies thereunder as citizens of Massachusetts. It was held that the appointment of attorney for acceptance of process survived the withdrawal of the company from the State as long. .230 TRUST COMPANY LAW [§141 had withdrawn from the State.

which the trust company purchased property. Rep. Driskill 1902 ). 610. 66 S. of money belonging to an estate held by it as an § 142. AV. the Court said assumed by defendant corporation. (1013). 353. 237. 1 In a case where a of a trust member of the board of directors person. it became the duty 2 : of that corporation to find an advantageous purchaser of the property of its cestui que trust. L. We have seen that "Its conscience is their conscience" and that therefore a Trust Company would not be heard to say that it was not affected by knowledge of its president of a fraud he had perpetrated on another company making it insolvent and unreliable as a place of deposit by the company. through a third company was employed to sell "Under the trust which was as trustee. 2. Co-Op. & Trust Co. 107 Pac. J. Mercantile Inst. 444. (1010). See also Gay v. v. See section 18 citing Germania S. affirmed on opinion below in 83 N. 2050. Eq. Eq. Young Men's Consol. that duty necessarily belonged to the board and to each member of the 1. Its officers are not merely agents of a trust company. J.CHAPTER XIX Trust Company Officers Impersonation of Trust Company by its Officers. 37 Utah 280. 23 Ky. 344. Purchase v. I V . They are the company itself. 87 Atl. As that corpora- tion could only act through its board. administrator. Atlantic Safe Deposit & Trust Co. 81 N.

People overruling 04 N. for the relation of the board to the cestui que . v. Div. Supp. E." And likewise it is held that a statute respecting trust its board of directors and to each director "separately and individually. They must give their best efforts to advance the corporation. Kavanaugh v. 99 N. App. 303. Liability for Duties of Directors § 143. or omit to do what was directed. Neglect Distinction as to Executive Committee. 147 N. 841. meant that the companies. Y. 758. Y. Y. Misc. Y. or not to do a thing prohibited. or otherwise. 381. 4. If at their meetings. N. The duties of trust company directors were thus sum4 marized in a New York case: "If the by-laws require monthly meetings they must — — make diligent effort to be present thereat. 281. . 118 N. trust was clearly in the nature of a trust relation. not- withstanding the fact that the corporation which the board primarily represented was the legal trustee. information should 3. Supp. and were alike entitled to the free exercise of the judgment of the director touching the desirability of the sale. a of the board did no member duty as a director — more than perform his plain a duty which he owed alike to the - corporation and to the cestui que trust of the corporation The corporation and the which he was representing cestui que trust were alike entitled to the service which was performed by the director. both the corporation by advice and counsel and by active work on behalf of when such work may be assigned to them. extends to directors should not make or cause the corporation to 3 do what was forbidden. Knapp (1912).232 TRUST COMPANY LAW [§143 board." for it would be idle and vain unless the legislature in directing the corporate body. acting wholly by its directors. Y. In finding a purchaser for the trust property. Gould (1911). 373. to do a thingrequired. uninfluenced by hope of personal gain. 206 N.

The law has no place for dummy directors. and their "large business connections. would not accept the position. .1 §143 EXECUTIVE COMMITTEE 233 come to them of irregularity in the proceedings of the bank they arc hound to take steps to correct those irregularities. that a smaller ciently and that number would do the work more effiresponsibility would be greater because It not so scattered." is to allow the trust company to reap an advan- tage without a corresponding measure of responsibility. To permit the cortrade upon the connection of men too busy affairs to give proper attention to their with their own duties as directors. merely because of the value of their advice in emergencies. whose membership trust was desirable upon the if company boards. number works more not have a large efficiently. They arc hound generally to use every effort that a prudent business man would use in supervising his own a! fairs. tors The further ground for distinction between direcgenerally and members of the executive committee. then explained that the busy busi- ness men. they were answerable for the neglect of the executive committee. with the right. ordinarily to rely upon the vierilance of the executive committee to ascertain and report any irregularity or improvident acts in its man- agement. however. and that the corporation "could not afford to loose them. on the not practical to commit supervision of detail to a large directorate (twenty-five in the case at bar)." This reasoning appears to me to be inconsistent with If a smaller the conclusion arrived at by the Court." The Court grounds that partly justified this exception as to a right of reliance it is upon an executive committee. the corporation should poration to board of directors.

I think. Land Credit Trust Co. 608. The liability of directors generally for losses caused by their negligence was recognized. Whether this right of reliance on an executive committee would extend to activities not recognized by the statute and particularly when they pertain to the strictly fiduciary capacities of a trust com- pany was not an issue in this case. which need be reported only to the execu- tive committee. York Banking Law ap- plicable to trust companies. the Court said: "The necessary inference follows that the directors not upon the executive committee are not chargeable with knowledge of detail management. in this case. 63 Atl. This is that the New more convincing. and this statute was therefore applicable. and that a member of the executive committee "was not negligent in taking a vacation while there were members of the executive committee sufficient to constitute a quorum at all times during the summer within reach. 70. Chambers v. 139 Pac. v. It was an action against directors to recover money lost to a trust com- pany by reason of their alleged negligence. National Mechanics' Bank (1906). As to right of directors to create an executive committee under 5. Relying on this statutory provision." to whom detailed information as to purchase and sales of securities 5 and discounts and loans may be made. provides that the directors may "designate an executive committee." A in failure of directors to hold meetings of. 6. (1914). in 6 must have Directors caused the injury complained order to be material an action against them for negligence. . 30. see Maryland Trust Co. express authority or by implication or usage. 102 Md. 92 Kan.234 TRUST COMPANY LAW is [§143 assigned by the Court." The negligence complained of in this case related to loans and securities. but it was thought there was no negligence proven as to non-members of the executive committee. 1178.

will offi- R. 215 N. 154. Div. N. will be presumed that directors examinations of a trust company's affairs required statute. (1916). 747. Thus a trust company may confer upon its officers or agents powers not ordinarily belonging to them. People v. 106S. Y. 706. 132 N. 61 Atl. Binghampton Trust Co. 109 N. Authority of Officers. 596. Gregory 370. Muth v. App. management are not have made the by- liable for a loss of trust funds. 99 N. authority of various trust company officers and liability of the corporation for their acts and omissions rest upon the same principles as those applicable to corporations generally. but that duty the defendant performed." Law. 206 N. 436. Y. (1915). affirming 147 N. 9 and it be estopped from setting up the want of authority of habitually permitting 6H7. 63. 841. E. 88 Mo. Supp. was further held that the statutory requirement of taking an oath to diligently and honestly administer the "is not the affairs of the corporation command by the legislature to thus administer them. Y. Louis Trust Co. Turner (1905). 373. App. .Dominion Trust Co. Div. 9. duty of honest administration was not prescribed. Carrington v. R. The extent of § 144. 324. where there is no crime.§144] officers 235 who had It taken no active part in the 6 *4 . v. St. Kress (1915). Knapp (1912). and according to the Penal a crime except 8 Law of that State. where a complaint by the superintendent of hanks in a civil action against a trust company director for neglect is upheld. 8. Supp. See Carnegie Trust Co. no act or omission It as prescribed by statute. v. Y. 32 D. L01 Md. (1901). Y. 7 There is no criminal in liability for negligence by trust is company directors statute making it a New York." so that an omission would come under the Penal "The duty of taking an oath was prescribed by The statute. N. E. i::7. L. by them to exercise them. Y. App.

who is also one of the chief officers. 152 Pac. in fact. 88 Wash. *4 was seeking a 10. 11 the "chief officer. appears in a Kentucky The Court said "By Section 6 of the by-laws of the Fidelity Trust Company the vice-president is made one of the chief officers of the company. Union Savings & Trust Co. Fidelity Trust Co. St. is in fact equal in power and authority with the president of the company. 20. these two conduct the trust affairs of the corporation. That the vice-president of a in trust company may be case. 455. v. and together with the chairman of the board. and Section 5 of the by-laws provides that the shall be divided management of all trusts among the three chief officers. is TRUST COMPANY LAW [§144 where it has received a benefit thereunder which 10 it unable to restore. 681. Ky. while second in name. 11. 190 Pa. Kelly (1899). and vice-president. so far as the settlement of this estate was concerned. who. W. the chair- man of the board. 957." so as to be authorized to sign papers that capacity. 775. Callender v. Krumm (1915). (1908). Mandel v. the president. and that each of said officers shall be primarily responsible for the management of was in the trusts assigned to him." 11 In a case holding that the powers of the manager settlement. and was. and therefore he was the only officer of the company who was familiar with the affairs of the trust estate of which he and was the only one qualified to make the affidavit in question. . 107 S.: 236 cers. The record in this case shows that the settlement of the estate in question accordance with the express provisions of the by-laws assigned to the vice-president. 1114. 42 Atl. the chief officer of the company.

Germania Sato Vault & Trust Co. The court held. 2O50. that his very liability knowledge helped on the trust company. . In this case it was held. thai of a trust courts have never laid down any rule as to what in- variably constitutes the limits of apparent authority as confined by the inherent powers of a given office. The other directors were not shown to have such knowledge. Ante. 2. 23 Ky. to fix. in its fiduciary business. the trust company was sued and claimed good faith in making the deposit. it was said that: "The actual powers of titular officers are so varied even in the same institution. that the rule of knowledge of an agent acting in a fraudulent transaction in his own behalf would not be imputed to his principal." Imputable Knowledge of Officer. This case concerned the leaving on deposit of a trust fund in a bank of which the president of a trust company defendant was also president and knew its unsafe condition. Lay Rep. and there was cited a case/ § 145.§ 1 45 I OFFICERS 237 company branch arc not limited to those oi a cashier.. Upon the bank becoming insolvent. or of an officer to his corporation. Chapter V. S. which should here be referred to again. did not obtain as to the beneficiaries of a trust fund in favor of a trust company. conclusively. In discussing the question of "the meaning of the word 'Trust' in Trust Company/"" a sharp distinction was noticed as existing between a trust company. and that of an ordinary corporation. and the president of the bank acting in a hostile attitude to the trust company of which he also was a president and director. 66 W. so tar as acts of its officers are concerned. his knowledge should not be imputed to the trust company. Sec. court after observing that there was no contest 18. however. Driskill I 1902). The 12. 610. v.

238 TRUST COMPANY LAW [§145 between the two corporations and. E. Where of a trust company acts outside of it. 437. "the corporation to have been engaged." Therefore it was thought. because one of its board of directors who placed the deposit therein allowed it to stay there. judgment. 3. in its fiduciary capacity. of the ruling in but regard it as well drawn as otherwise there would be a very serious difference between individual and corporate trustees. Jamestown Mantel Co. Carington Turner (1005). be bound for the acts of its officers as to matters in which a bank would not be held bound. does not take luded this case. but to. and "whatever knowledge they may have. as through its official boards. 4. wherever or whenever obtained will be used * * * exactly as if they trust were acting personally as * * * trustees. 210. its trust capacity. no place for the ruling to be invoked. because of the imputed to the trust company. 101 Md. away all affectation of the rule above alI make no criticism. acts not so much through its officers. it 4 may in promoting the creation and establishment of other corporations. the trust company being held to contract that those managing its fiduciary affairs are "men of pru- dence. therefore. Y. honesty and reasonable skill. however. as the Court says. as in discounting a note offered to what one its board of directors knows of its invalidity is not 3 And. 61 Atl. v. 105 it Jacobus v. . largely in favor of the former. (1914). 211 N. then went on to say that a company." sibly Posthis an ordinary bank engages the same way. not in a trust capacity. The testimony strongly indicates that 154. as modern trust companies often are. This case shows. varied powers exercised by a trust company. N. that the trust company knew the unsafe condition of the bank. 324.

by knowledge of its president and cashier in the fraudulent purpose of an executor mortgaging trust property and its being used it in a partnership venture by the three. There was sought to bind the trust company. or aid in so doing. Camden Safe Deposit & Trust Co. 480. 58 Atl. that knowledge of the wrong cannot equitably be imputed to their principal. 07 N." When this case is compared with the is Driskill case supra an essential difference seen to exist as to the binding force of acts by officers of a trust company so far as its ordinary business department is concerned and where its fiduciary relation is involved. and their interest in the matter was so opposed to the interest of their principal. 607. Under the former aspect it would seem necessary to show that besides knowledge an officer would have to have an interest fraud for the presumption to arise that his principal was not informed. Under the latter aspect it would make no difference whether he had such interest or not. in a 5. to advance money on mortgage made by the trustee (executor) to the trust company which they intended to misapply. as an ordinary money lending corporation. as representatives of the trust company." the community and assisted in floating its Distinction in Rule of Notice and Guar§ 146. J. antee of Fidelity. Eq. as members of the copartnership.: §146] OFFICERS 239 launched the Security Fire Insurance Company upon stock. . were dealing with the institution of which they were the managing officers. (1004). But the principle announced in the 3 Jacobus case supra is also declared in a New Jersey case. The court said "The president and cashier of the trust company. In their own interest they were a contracting with themselves.

" While the case speaks of appellant's "friend. There was evidence to show that the president acknowledged to the trust company that this was his debt and it looked to him for The Court said the defendant "did not become accommodation maker at the instance of the trust company and for its own purpose. and that it continued to look to him for payment. Knowledge to be Imputable to Trust Company Must Presume Fraud. 66 Atl." as a fact this friend 6. 506. He lent his credit to his friend. L'17 Chestnut Street Trust Savings Fund Co. and it guarantees the integrity and the preservation thereof. voluntarily as- sumed. A transaction on its § 147. That (his friend) continued to acknowledge his liability to the institution. Thus a case by Pennsylvania Supreme Court" shows a note given by an under officer of a trust company to it for the ac- commodation of its president. it. I was the president of the & trust v. face a lawful transaction must to be rendered invalid. If it had. 870. to whom it surits when received appellant's in which was an absolute promise in writing that he would pay the indebtedness of his friend. he could now successfully defend. was only in probable relief of the appellant. and not in discharge of his absolute liability. company. place. ordinary business capacity. show corruption by the so as to be imputable to his principal. commodation of one of rendered his note.240 TRUST COMPANY LAW [§147 because in the trust relation the trust company guarantees the fidelity and honesty of its officers in handlingits trust funds. . but Hart (1905). because of knowledge by an in its officer. He gave the note for the acpayment. 'a. officer of a trust company. and his friend's creditor accepted This is the whole case boiled down. its it customers.

Hudson (1SS6). 508. certainly can pass a good title to a bona fide purchaser for value. Lovitt (1893). 210 60 . Taylor on Corp. 2nd Ed. 825. while if the dealing with such a corporation it is as a fiduciary. 52 Am. all that is necessary to hold is to liability to show. S. that the bank's looking to the president for pay- was ignored ment any wise affected the transaction at the start or that for any consideration moving from the maker he in was later to be released. Frenkel v. But Commercial Bank & Trust Co. and the field of his market would be circumscribed by an accidental circumstance. 114 Mo.. either. Bank (1885). See Merchants' Nat. Am. v. v. 35 Am. . Nat. 736. 139 Mass. 90 Atl. It was said that the authorities "hold clearly that a bank officer who offers to his bank a note for dis- count is to be regarded in that transaction as a stranger. Innerarity v.. 82 Ala 158. The principle here treated 7 is also illustrated in a Pennsylvania case. that without proper authority or not acting Dominion Trust Co. Ala. One negotiating paper before maturity fair on its face. where knowledge of the president of a trust company of fraud or want of consideration in a note. where the knowledge was acquired outside of his duties as such president..§147] this fact OFFICERS 241 as unimportant in view of the note being an absolute promise to pay. (1915). Rep. Merchants' 332. 69 So.. and the bank is not chargeable with the officer's knowledge of fraud or want of consideration for the note. It does not appear.'" This rule. But as we observed above. Rep. Rep. 770 . 69. Pa. really is of no effect that way. is not imputable to the company. if his individual knowledge as an officer is to be imputable to his corporation. St. 519. while apparently operating to further fraud. 7io. Hildner (1914). it is necessary where one is dealing with an officer of an ordinary corporation to deal with presumptions. 21 see 7 Tatum 8. Bank v. W.

Protection of Customers' Affairs from Disclosure by Trust are not privileged. Vtr. Sturdee v. 197. 18 N. 211. 111 N. 11.242 in the TRUST COMPANY LAW [§§148-9 way it of an absolute insurer. company was to hold the deposit for the and this notwithstanding the fact that the depositor was an officer of the trust company. to trustees. Tenth National Bank (1888). v. This case showed the deposit of a cashier's check with a trust company to the credit of the depositor. 10. 1 618. 11 wherein it appears that the Earl of Manchester held the key to a box containing deeds belonging to his cestui que trust. E. Y. . the trust fund whose integrity guaranteed has been lost. or to a banker. Co. and the giving by him of a check therefor to a railroad company on the same day. Countess of Manchester." § 149. Tn support of this rule with respect Wigmore in his treatise on evidence cites an English case. The trust company suspending payment this check was never presented. This proposition is illustrated in a 9 case in Second Circuit Court of Appeals. (1912). 446. There was an attachment sued out against the railroad company. notice to an officer to be imputable to a trust company it must be as to a matter in the line of his duty or relating to his department. v. For § 148. The Earl refused to sur9. Confidential communications to a trustee. Notice to Officer in his Department. Company Officers and Agents. Mayor Jones Cuba Eastern R. The Court said the duty of the trust depositor. 196 Fed. as "his connection with the trust company did not relate to the receiving deposits or crediting the same and the mere fact that he knew of a transaction which he was under no obligation to disclose and which did not relate to his department does not constitute notice to the Trust Com10 pany.

which he held sacred and inviolable. it is against the duty of to discover the evideu tee which he may and ought to produce writings. etc. a banker was asked the amount of the suspect's deposits on the date with relation to which the tax return was made. 08 Kan. it is argued that. 701. yet a trus- was the conclusion of the Kansas Supreme Court.. 75 Pac. because the matter concerning which he was interrogated was privileged. that after In this case 12 it appears upon an investigation by a grand jury as to whether a certain person had committed perjury in making a tax return. the Court said: "It is next insisted that the petitioner should be discharged. was sought inger on to ascertain 1st. To the objection that this was privileged. In re Davics (1004). 1048." The Court said that the law required the surrender of the key.§149] OF] I' 243 render the key on the ground that "it would be a breach of trust reposed in him. . and that to require a disclosure by a banker of the tor's credit on the amount standing to a deposibank books would be against public policy. Counsel thus contending frankly. a review of prior authorities. "tor though a counsellor or solicitor. etc. Again." That communications to a hanker are not privileged retains who him acquaints him with. By the inquiry in this case it how much the bank owed Bell- March The ordinary debtor would hardly stop to assert a privilege in his behalf to protect him from disclosing the amount owing by him to another. The relation of debtor and creditor exists between a depositor and banker. to permit grand juries or courts to inquire into such private affairs of business men would cause withdrawal of deposits from banks annually for 12. admits that he has found no adjudicated case which sustains his position.

is another matter and worthy of serious consideration at the hands of those who desire to enhance the standing of the trust company as a repository of complete confidence. C. 325. others to avoid publicity.. except upon the witness stand. v. R. To obtain information from a witness. In the case of it C. Taylor. 248. There was nothing confidential in a legal sense. That to comfrom the witness would be an unreasonand seizure of the depositor's property is able search for untenable. 915. the banker.). 18 Ontario P. 2 Taylor on Evidence. Sec. a copy of which is set forth . Freshfield. 185. decided in 1826. 244 TRUST COMPANY LAW the 1st of [§149 many weeks preceding March —some to es- cape taxation. was bound Loyd v. Greenleaf on Evidence (15th Ed. of the amount and location of another's money or property. and his depositor. J. or the loss to banks predicted by counsel. that the business transactions between leged. the "Model Trust Company Law" prepared by counsel for the American Bankers' Association. 2 was held that a banker party's balance was on a See also MacKenzie v. The rule finds approval in the text-books. as it was not a privileged communication. not to extend but to curtail the it privilege doctrine. In line with this idea. Sec." which would allow the former to assert them were priviis The tendency truth. cannot come within the constitutional inhibition against unreasonable searches and seizures. has never appealed to courts or legislatures with enough force to work a change in the rules of evidence. 83 Hannum pel a disclosure McRae. between Davies. to answer what a given clay. & P. It is sufficient answer that annoyance to depositors. as prevents the disclosure of the To provide against the divulging of information relating to the affairs of trust company clients. 6 L.

16. The practical difference It reads as follows "Except as herein otherwise provided. 1908. Penal Law. each and every officer. not a radically novel suggestion. 553. this includes No doubt employe and agent between this of the company. to it. p. and no creditor or stockholder shall be entitled to disclosure company New York New York Oh:» See page 277. management and administration of any trusts confided of any such trust 13. and laws providing that no stenographer shall disclose any matter received from an employer. Sec. condition. and the form suggested in the model law is the absence from the California act of any penalty for its violation. etc. 15. Penal Law. 619." disclosing or personally using lists of cus15 tomers surreptitiously taken from an employer. except when "called as a witness and directed to testify by a proper " court as to matters within his employment. Statutes. . It is a specific application to trust companies of the laws againsl divulging contents of telegraphic or telephonic This is messages. except as they may be compelled by law to disclose them.. Sec. 20." contains a section proagents of trust companies shall viding that officers and keep secret and confidential. Sec. any trust company exercising the powers and performing the duties provided for in this act. shall keep inviolate all communications confidentially made to it touching the existence." The California trust company law contains a pro1 vision against disclosures by trust companies. 14.: §149] in the OFFICERS 245 book. California Penal Code. under penalty of a fine of one hundred dollars for each offense. the affairs of all persons this is Appendix of whose business entrusted to their respective companies. 552.

to the Codes. California. condition. 103. 575. 67 N./</ knowledge of such communication. Burns' Annotated Indiana Statutes. . employes and stockholders identified with a trust company. . R. or as witnesses to wills appointing the trustee? 18 company as executor or It has been held. so as to disable them from acting as notaries with respect to instruments running to the company. corporation 17. 850 485. 9539. shall act as a : notary public in the business of such bank. provided. Sec. 18 So. 20. 20 Indiana has provided by statute that "No person. Sec. management or administration of such trust. that in any suit. in the absence of disabling legislation. the court wherein the same pending tion. W. further. Whether a per§ 150. 1909. 37 L. son is a competent witness to a will depends it. Rivers. being an officer in any corporation or association. Chap. 514. 19. or in any bank possessed of any banking powers. 16 Porto Rico 599. 76. v. that an officer who is not a stockholder may 19 and so act a Porto Rican case holds that a deed of sale of real property executed in favor of a bank before a notary who is a stockholder is not void on that account. An acknowledgment taken before a notary who is a party in interest is void. 434." 17 may require disclosure of any such communica- Competency of Trust Company Officers. upon whether he will take a benefit under How far are the officers. Horbach Suarez v. manager and secretary of such trust company shall be entitled to (/. Employes and Stockholders to act as Notaries and Witnesses.246 TRUST COMPANY LAW [§150 of any such communication provided. Florida Savings Tyrell. however. Statutes and Amendments Bank v. or proceeding is touching the existence. 18. that the president. 48 Neb. 36 Fla. El Banco Territorial Y Agricola (1919). A.

§150] NOTARIES AND WITNESSES 91 247 or association." The competency of a stockholder in a trust to act as a witness to a will appointing the trust company company 23 executor was directly in issue in an Illinois case. or broker. in question It appears that one of the subscribing witnesses to the will company." rector or officer Pennsylvania provides: "That no diin any bank. E. p. or trust com- pany in which he or she may be a director or officer. 23. collectively. shall be competent to act as notary public in any matter in which such bank. or clerk of a bank. Gouch (1915). 121. 5S07. . represented artificial by the corporate entity. teller. broker. banker. 111 N. director. In identify- ing the witness's interest with that of the company. Sec. General Code of Ohio. 1910. banker. 22. banker. cashier. that though the trust company it was appointed could not act as executor. official broker. 273. Scott v. hanking institution." According to the Ohio Code:" 2 "No banker. the Court said: "Every dollar and every piece of property comes to a corporation comes directly to the stockholders and increases the value of their stock. or other person holding an relation to a bank. Supplement 1905-1910. It was a director and a stockholder of the trust was held. Purdon's Digest. the stockholders." 21. or trusl company shall do or perform any act or acts as notary public for such bank. were executors of the will. In subthat stance. banking institution. or broker is interested.

2. 101 N. See Spalding v. Dist. v. 1 implied duty of the State to see to the continuing solvency of trust companies has been mentioned. 96 Atl. 402. Oregon Savings & Loan Co. People v. Northwestern Trust Co. 41. 1068.CHAPTER XX Visitation and Supervision — Reports—InsolvencyAn ma- Preferences § 151. Y. E. 13. W. In re McKinley-Lanning Loan & Trust Co. The legislative power to provide for such supervision and the vesting of authority in commissioners to revoke a company's charter on non-fulfillment of the requirements cannot be doubted. Carnegie Trust Co. (1892). Roseville Trust Co. superintendents of banks. 109 N. Calif. 1. and the requirement of examinations and reports. Visitation — Supervision — Reports. Chapter IV. 90 N. Y. Kress. trust companies which perform 3 Their no banking functions are subject to them. 706. 215 N." And though these requirements are termed "banking" regulation. 3. 14. 72 Neb. That a trust company doing no trust business is not entitled to a return of bonds deposited with the state. State v.. 455. because it might resume trust business at any time. 497. 149 Pac. v. Roberts (1915). Sargent v. The legal chinery through which this is accomplished is the placing of trust companies under the control of state banking departments. Ore. 10. (1904). R. 551. Mutual Trust Co. 1 Pa. (1884). Sec. 144 Pac. Mott (1915). . (1914).

including trust property for a reasonable time until new trustees can he appointed to take charge of and execute the various trusts. 2) contemplates that the corporation. Y. or to collect the moneys dne the company. appears in Craughwell v. upon taking possession the Commissioner of Banking holds all the property and husiness of the Of course. may he : 5% permitted to resume husiness. (1915). And. corporation. 77'. including the double liability of stockholders and to liquidate 4 its affairs.maintained. 4. f>Vz.' When possession taken by stale officials either for the purpose of maintaining the status <ju<> until the threatening conditions are removed. to institute a suit for a receiver and to wind up a trust company. W. (1915). Missouri-Lincoln Trust Co. hut not for the purpose of administering the trusts that have heen confided to the trust company. 222. That such means arc exclusive of individual right of creditoi stockholders. Kuolt (1914). See also Koch which would result from unfounded individual action. Monsam River Trust Co. continue for many years and call for their terms. Me. 1 14. 15 X.'.secondary object is to provide prompt and efficient primary objecl is to means is for taking charge when insolvency threatens is or it appears. Sullivan v. 156 Wis. 7:3. This is to prevent needless alarm and the public injurv 93 Atl. i-a S. X. whose property and husiness has heen taken possession of by the Commissioner of Banking. while he so 101 Van Tuyl v. will. Thus it was stated "While the statby the Supreme Court of Wisconsin ute (section 2022. E. it nowhere contemplates that the Commissioner of Banking shall carry it on or continue longer than reasonably necessary to effect Some of the trusts set out in the complaint liquidation. 53. Their . . 5. by it duties wholly foreign to that of the Commissioner of Banking. subsec. W 210. 208 X. Scharmann (1913).8151] supervision 249 compel the operators of trusl com panies to observe the restrictions imposed by law upon them to the end that their solvency may he. v.

move for their appointment.250 TRUST COMPANY LAW it f § 1 52 holds the trust property. Form is not the essence of the matter. A. § 152. 130 V 100 280. where there was no discussion of For example. Identifying of Trust Fund or Proceeds Necessary in Equity. Pape County v. S. protect it is his ditty to conserve and as far as possible until new trustees can be appointed. for he charged with the obligation of winding up the trust business of the insolvent corporation. that a bank or trust company may be held as trustee. R. where taxpayers pay diits being traced. (N. upon To do so would beque trustis come his duty under the statute. There are abundant cases where a fund has been declared a trust fund. The ccstuis que trustent may by notice and motion apply to the court for the appointment thereof . if the ccstuis cut unreasonably delayed to make application. 213 N. the New York it law has all the powers of a Though 5374 the trust company conits tinues to exist as a legal entity. 8 Am. W. while it is still carrying on business as a solvent institution and giving to a trust fund a preference right an insolvent institution. N.) 886. Biggs (1915). cannot exercise its powers as a corporation. formal action for the appointment of new trustees is necessary. 5 L. 114. Cas. There is a great difference in holding. bank authorized v. Iowa 290. Rose (1906). 744." A superintendent of banking in taking possession of a trust company under receiver. No or the Commissioner of Banking- notice. in the distribution of the assets of rectly to a 5M6. the complaints In the present case may be considered petitions or motions addressed to the court for the purpose of securing the appointment of new trustees. may himself. to issue receipts therefor 6 Lafayette Trust Co. .

I Xat. L898). \ 562. ed. therefore. C. Bank of Friar's Point v. so 80 N< M Iowa 500. 52 Neb. A Ft . so far as possible are represented in the remaining assets of the bank. mingles with general Bui the principle. v. 375. 929. Where in bank within door received few days of closing its special deposit of $1. 6 7 71 I* 1 ' 55 Pac. and that the trust moneys. "The Rank Rank State v. Rep. T i r 1 v Runting (1900)." to be treated otherit wise than as a special deposit. collector deposited his collections in a : where a tax bank as that failed that "The bank received it (the money) a trust fund nolens volens." If the facts permit the conclusion. It is a leading principle of equity jurisprudence that 'whenever a duty rests upon an individual. 31 C. W. (1900). 3. the court said: '2. that the cash assets of a failing bank are augmented by the will 4 trust fund. State Beard v. 4. R. I L902).152. 59 Pac. and the principles of equity relating to trusts fully apply to it. 780. 66 Am. State v. 15 Independent District King (1890). in a case fact. W. it knowing its the character of a deposit forbidding funds. . Bank of Commerce 52 L. that there musl of a fund of a trust character. 102 Fed. Midland LOU. is plain deductions from shown by presumptions <>f law. in its Ik- identification original or altered form. State Fogg v.' * * * It must. in the ahsence of all evidence to the contrary.§152 rRUST funds 1 - : 1 and it makes no difference that the hank. Independent Districl (189 New Orleans Debenture R. be presumed so far as it may. 54 X.500 and turned over a cash to the receiver $1. Richardson v. 858. Thurii (1898). St. to that extent it be recognized in the distribution as a prefera a ence claim. Idaho X.66. that the hank as trustee preserved the trust fund until all its other estate was exhausted.1. (1897). I. 18 C. 27.~C \ 619. as well as by Thus it was said. Co. I. it shall he presumed that he intended to do right rather than wrong.

App." "Under these circumstances a trust was created. so far as the (trust company) was concerned in it. A. The dual nature of a statutory trust company. 292. so far as remains a going concern may obligate itself in almost any transaction any bank may. A recent decision by New York Appellate Division 6 is quite instructive on the point of power in a trust company to make itself liable as a trustee in equity. (1902)." The Court saw noth5. Crandall v. The evidence proved that the fund had been encroached upon to some extent. 104.252 legal TRUST COMPANY LAW [§153 presumption is that this belonged to the trust fund. (1915)." 5 Trust Company. 4. was negotiated and consummated by officers acting within the scope of their authority. that is to say as an ordinary business corporation in one aspect. its relation to deposits made over it its coun- As it perceived above. just as was said that: "The transaction. as a trustee. . 167 N. which fund or the shares were at all times to be held by the Carnegie Trust Co. Woodhouse v. E. f>4 N. 58 L. Carnc^c Trust Co. a third party by aid of its officers contrived to have money represented by a check payable to the company. Div. this trustee capacity may accompany the transaction in insolvency is that of which I am to inquire. Y. Same Applied to a trustee in another aspect. The case shows that by manipulation. passed to his individual account. but the law does not presume fraud or wrong-doing beyond what is established by the proof. 152 N. and a § 153. 197 111. Madison Trust Co. 517. R. tends to enhance opportunity for confusing ters. Y. but whether outside of the preferences given by the law of its organization. Supp. 385. 6." but its "clear purpose was to provide a fund It for the purchase of certain shares of stock. for the benefit of others.

and continued by a trust company made by it depended upon how it treated (trust "The agent lation to that company) would change the reof debtor and creditor were it to mingle the funds collected with its own funds. 154 X. and on failure of the agent pending 7. by additional deposits. the trust would continue." It a trust was was also held in a Connecticut case that whether 8 established as to a collection the fund. Keeping the fund set apart or on special deposit for its principal. trust company for its services was to receive a large commission. but not by an ordinary check and from time to time it became low." In a still mure recent New York case. the trust company writing said "we accept the trust. and for a very brief period for business convenience. as it a trust account. Y. Supp. 90 Atl. credit the collections to the sending bank under its arrangement with it to make remittances at specified times. however. 8. Thames Loan & Trust Carnegie Trust Co. Lc Bandy Lippitt v. Co. . it held the funds collected. 908." a depositor in what was called Upon in the initiation of the account. If. 369. 900. on the other hand. - 185. Conn. v. was drawn on as an ordinary account. SO that the proceeds went directly to Cummins." The account. 7 an account ''the trust was kept with ledger. The court said: "It might well be that in a contest between the plaintiff and the trust company.§153] TRUST FUNDS 253 ing in "the fact that on receipt of the checks they were at once indorsed away. where the character of the account was an issue.. intending under its agreement to make immediate remittance. the trust company would be estopped from denying that this was was The replenished. (1914).

the principal would be entitled to them. 66 Atl. Co. such as a receiver. fund can be traced as it seems to evidence of the existence or non-existence of this (trust) relation. the claimant to the fund must assume the burden of proving the existence of this trust relation. In Pennsylvania" it was said of a rule of court. where the package of money as it was turned over to the trust company still remained in its vaults unused. it must be kept separate and earmarked." This case it is perplaintiff. 995.000 paid to it on its check as a mere accommodation the day before it closed its doors. 50. ." As showing that such existence may be proved by mere swelling of assets in the hands of a receiver. deposits rule money with a trust company. but this would not apply where arrangement was made for the deposits to draw interest. (1907). 218 Pa. the title never passed because the possession was obtained by a plainly implied misrepresentation. the package of money from is impressed with a trust. where the fund would have to be traced and the facts showed this could not be done. This court allowed a bank to recover from the assignee of a trust company $2." and "whatever the ground of recovery adopted. It was said that: "Under the facts. City Safe. & S. 9. and then declaration was made that though there were a trust in this case it would be a trust in equity. D. Commonwealth v." It is then declared that is : "Whether or not the us. the observance of such a would create a trust relation. if insolvency overtook the company and it nevertheless collected and held the proceeds they were the impressed with a trust. it was said that.: 254 TRUST COMPANY LAW [§ 153 transmission of the funds. that Where a person occupying a fiduciary relation.

or that its loss involves greater apparent hardship in one case than another. so far as we know. Security Trust Co. or that it arose out of a violation of duty. Bank Comm'rs. 536. is such a useful one on quoting from it at some forbear cannot the subject that length.' If there is property in the posin trust session of the assignee that was held by the de- fendants. " and the suit was against its assignee in insolvency. or was of a fiduciary character. 2o2. it would not follow that the claimants would be enIn Cavin v. it is upon an accounting creditor is in said: It is clear. 255 in the fact of ceived differs with that which precedes ability to trace the money. without in. 105 N.§153] TRUST FUNDS it. Y. It was . that bankruptcy or insolvency. the ccstuis que trustcnt are entitled to their interest in it But : notwithstanding the assignment. 40 Atl. II. (1901). titled to the relief they now seek. Gleason. . v. lia. 70 X. It related to collections made by a trust company 1 A New Hampshire I case." "Proving that there was a trust at one time is in particular property does not prove that the trust im- pressed upon other property at a later time. unless it appears in addition that there is some specific recognized equity founded on some agreement or the relation of the debt to the assigned property which en- titles the claimant. 256.said: "If it were found that the relation was that of trustee and cestui que trust. according to equitable principles. of no exception founded on the greater supposed solvedness of one debt. a trust not entitled to a preference over general creditors of the insolvent merely on the ground of the nature of his claim —that is that he is a trust creditor as dis* * tinguished from a general creditor table doctrine that as * The equi- between creditors equality is equity admits. we think. to preferential payment.

11. 11 is quoted as saying that: "If the trustee has become bankrupt. that a trust will not be impressed upon other property according to the mere probabilities in a business disaster. definite character. the rule requires a tracing of trust funds by the claimant thereof and this by proof of a rational. Before leaving the subject of trust fund that may be followed in equity. . 12. does not prove that the money or property into which it may have been converted was on hand at the time the assignee took possession. 151 Little v. the proceeds or substitute of In this case. itself. A. R. proof by the claimants that the in a fiduciary capacity. 593. Mass. E. nor that the estate as a whole. it is interesting and perhaps important to conChadwick (1890). The rule seems firmly established. C. the court cannot say that the trust money is to be found somewhere in the general estate of the trustee that still remains. A. 7 L. but be that as more valuable than it would have been other- may. See also Empire State Surety Co. v." It would seem unnecessary to further pursue the branch of our subject under this section. 23 N. 109. Misusing trust funds may contribute to. both English and Amer"The difference in the authorities after ican. rather than arrest.256 TRUST COMPANY LAW latter is [§154 showing that the the former. such result. collected defendants acting for money them a year or six months. and says: all mainly relates to the application of the rule. rather it than to the rule § 154. 1005." 12 Acts of Officers Creating Trust Fund Money Though No Passes to Trust Company. was then larger or wise." The New Hampshire case cites and discusses a great abundance of authority. Carroll County (1912). 110. or a longer or a shorter time before the appointment of the assignee. C. 570. 194 Fed. Thus a Massachusetts case.

§154] TRUS I FUNDS 257 grounds of dissent of two of the five judges in Madison Trust Co. A check was given by plaintiff and it was indorsed by the company to another of its officers who appropriated its proceeds. I think. says: very clear that (the vice-president) "The evidence is was never in fact authorized to negie make the agreement in behalf of the CarTrust Company. and an agreement to do so. the to buy certain stocks and hold them as trustee. be well within the corporate power of the Carnegie Trust Company to hold them as trustee for the Van Norden Trust Company. in all and this part <>f the agreement was my opinion. contended. The company was sued upon an agreement by vice-president for the trust company. however. but they are argued in a way that suggests want of apparent power in a general officer acting alone to commit a trust company to responsibility. for it never came into possession of the stock. signing for it. in face of the established want of actual authority. however. would doubtless be within the apparent scope of his authority. J. signed in the name of the company by any general officer. It is not that portion of the agreement. supra." . The breach with which it is charged is that it did not buy the stocks at not. of course. * * * and there is nothing in the case which would justify a pre- sumption of authority in the vice-president to so agree. which the company is charged with breaching. within the apparent scope of (the vice-president's) authority. Carnegie Trust Co. no trust even of an equisider the table nature. would. The facts in this case are special. If the stocks had actually been it bought. This minority agreed with the majority that there was no They preferential lien under the New York statute. v. that no debt was shown against the trust company and. The dissent by Scott.

258 TRUST COMPANY LAW [ § 1 34 Whether this reasoning would hold or not in the face of the fact. executors. X. as distinguishing said stocks and bonds. (X. it was S9 Gause v. it is unnecessary to inquire. the question of ultra vires is of comparatively small importance. i34. are its stockholders. and t«> a large extent they take the place of individual . except in behalf of the State in their public capacity. E. that turning over a check for the amount was the same as paying over the trust company's counter the amount thereof. . 47G. Where the vice-president of a trust company. and their only interest therein is to secure dividends upon their investment. 24 L. 13. between a trust company and a bank. 1 ' This case." It goes on to speak then of banking institutions occupving a fiduciary position and especially of trust companies saying: "Their primary work is of a trust capacity. speaking of an agreement by a trust company to become the guarantor of a note secured by col lateral in the way of certain bonds and stocks. It seems to me that this would obviate the difficulty of ultra vires But the question suggested remains and a Court of Appeals case is cited in its support. A. and the courts treat the question as it relates to such a corporation very differently than they do in the case of a banking corporation. S. (1909). R. committees.administrators. 196 X. guardians. said this was in effect an attempt to guaranty the future value of The opinion. Y. and the only person interested therein. said: "Where a corporation is organized for business or trading purposes. receivers and This contract was held to create no liability.) 967. Commonwealth Trusl Co. made representations to prospective trustees/' purchasers of the value of bonds secured thereby. other than its business creditors. trustee under a mortgage.

203 X. V. (1911)." think the dissenting opinion in the Carnegie Tin -t Company the check payable to money or it wrong. then he greatly errs. Trust Company. E. X. Guardian TruM Cm. Carnegie Trust Co. but. hut it is no harder than that of thousands of other de It is not to be positors of this wrecked institution. in out any contest in court. Justice Shearn in Le Battdy v. and should. in the cases In my opinion. this right. because the delivery to it of the its order was the same as paying to it called Eor and a vice-president at least had to power to indorse the check. he means that there should be substituted a measure like the Chancellor's boot to cover hard cases. or. be disposed wherever possible upon the principle that equality If the learned in the if i if is equity. wondered at that the plaintiff sought a preference. 751. supra that: "(Plaintiffs') case is a hard one. all preferences of insolvent banking institutions should be resisted by the public authorities." judge takes this principle as explained is all New Hampshire case supra.§155 PREFJ | Rl 2 . except where they are statutory. . when in the courts. 14. Davidge v. ' held there thority to I was no presumption of law that he had au make such case is representations. Statutory Preferences Against Insolvent § 155. 331. how: view of the fact that preferential claims to the amount of several hundred thousand dollars have been allowed and paid out to a small group of creditors withever. In respect to the lamentable wreck of the Carnegie Trust Company and as a seeming rellectiini on administration of its assets in insolvency it was said by Mr. unless the knew had reason maker of know he would indorse the check it in fur thcrancc of an unlawful agreement.

10 under a statute the trust company's check. are fundain their very definition and should be enforced as religiously as are priorities in the distribution of de- cedents' estates. 107. And in a New Hampshire case. If the statute extends to too many things. For example. say in collection of a draft. Security Trust 75 N. which ought not to be differentiated in this regard.S). Commonwealth ex. (190. v. . 153. 430. It was held that a bank dealing with a trust company. because by the promises contained in the statute are funds entrusted to these institutions instead of to banks. the Pennsylvania statute providing for the distribution of the estates of insolvent trust comtheir fiduciary character as panies directs that deposits therein shall be first paid. could not claim that a remittance made by was sent on mere substiin place of a depositor's check on it. cess they If they think they help out the prospects of suc- make their choice in opening accounts with them or having business relations with them outside of determined by statute. it More sacred even than these priorities may be argued are these preferences. 88 Atl. 16. was a tute for such check. 71 Atl. which are found in the laws for the organization of trust companies.260 TRUST COMPANY LAW [ § 1?^ The mental statutory preferences. 241 Pa. which 15. (1012). Bank Commissioners v. American Trust Co. and ordinary depositors into and others dealing with trust companies enter the relation of creditors with them as debtors upon a clear contractual understanding. Co. PI. but the transaction was one of debtor 15 and creditor between the bank and the trust company. rcl. then they should resort to the latter instead of the former. 377. and depositors should deem they jeopardize their deposits in using these institutions as compared with ordinary banks.

1 §155 ii'i h ii nxes 261 giving to depositors savings department of an insolvent trust company a preference. they alon^ with the holders of secured debentures. might in the share as to deficiency witlumsecured creditors out of the was said: "The legislature did not intend to make two separate institutions of such trust companies as were engaged in the savings hank business. general assets. It hut did intend to create funds for the special henefit of the depositors in their savings department. it was held that when the funds of such department were exhausted." .

Copies Alabama. its provisions in this The report of the Committee on Protective Laws of the Trust Company Section of the American Bankers' Association to the Convention of 1915 panies Magazine for Sept.APPENDIX Trust Company Statutes and Sources from Which Pamphlet Copies May be Obtained Statutes pertaining to trust companies are usually contained in pamphlets issued without charge by Depart- ments of Banking or by Secretaries of State. Montgomery. is printed at the end of this list. therefore. Trust Company laws are contained in pamphlet entitled "Domestic Corporation Laws of Alabama. In this form they generally embrace all amendments. It is. stated that the revised trust company law of Missouri worthy of being used as a model by other states." issued by Secretary of State.. recently p. ." of this law may be secured as indicated below. however. 1915. Ala : bama. The full text of the New York Trust Company law. thought that a reference to these sources will prove of more practical benefit than a reprint which would necessarily soon be out of date. (Trust Com"is 222). because of its recent revision and because of reference to some of book.

Pamphlet entitled "Banking and Trust Comptroller. Connecticut.. Hartford. tary of State. .\TTTF. Pamphlet copy of "Act for the Organization and Control of Banks. Pamphlet copy of Corporation Laws. Atlanta. of the District of Columbia. Phoenix.. Tallahas- Laws of the State of Florida. "Banking Laws of Colorado. Ten cents Wash- Florida. Pamphlet copy of "An Act to Provide for the Incorporation of Trust Companies. Arizona. Florida. Secretary of State. San Francisco. Mills Bldg. California. attic Rock. Arkansas. Secretary of Idaho. Denver. Colorado." see. California Banking Association." Address Bank Commissioner. No Address Department of Banking." SecreCalifornia. Idaho. Banking and Trust Company laws. Delaware. Secretary of State. Georgia. Pamphlet: "Laws relating to Banks. Trust Companies and Savings Banks. C.S 263 Arizona. District of Columbia. Savings Banks and Trust Companies. Pamphlet of General Corporation Laws. I Arkansas." Superintendent of Public Documents. ington. California.Colorado. Sacramento. sion laws of 1911 amendments was then necessary. Boise." State. Secretary of Delaware." State. Connecticut. Georgia. pamphlet copies of trust company laws were Purchase of ses and 1913 containing original act and available at time of inquiry by author. Pamphlet entitled "Trust Company Laws per copy. D. Correspond with Arizona Corporation Commission. Dover.

TRUST COMPANY LAW "Laws of the State of Illinois governing corporations with Bank Powers and Trust Pamphlet: Companies.264 Illinois. tains . Maine. sembly." Illinois. Kentucky. New Orleans. Chap." published by F." Secretary of State. Banking Department. Kansas. 300 New Orleans Court Building. Indiana. 1915. Hansel & Bro. New Orleans. Kansas. Maryland. Pamphlet on Kansas Banking Laws. Louisiana. Trust Company Statutes are contained in pamphlet on "Kentucky Corporation Laws." and law on "Loan. Topeka. Frankfort. Pamphlet copy of General Corporation laws and copy of Chapter 152 Acts of the 35th General AsIozva. Pamphlet on "Banking Laws" contains trust company statutes. Louisiana. Iowa. Springfield. Kentucky. Indianapolis. Book containing "Bank Laws." State Bank Commissioner. F. Laws of 1910. Augusta. No pamphlet copies of trust company or banking laws were available at date of inquiry by the author in Sept. Secretary of State. Maine. Not available in pamphlet form upon date of inquiry by the author. Statutes pertaining to trust companies run through various acts of the Legislature and are contained in "Marrs Corporation Laws of Louisiana. 219 and subsequent Session Laws. Indiana. Session Laws of 1913. Trust and Safe Deposit Companies. See Annotated Code of Maryland. Address State Banking Department. con"The Trust Company Laws." Banking Department of the Auditor of State.. Auditor of Public Accounts. Des Moines. Ltd..

" Secretary of State. Ma — Pamphlet on "Laws Relating to BankMichigan. Trust Companies and Safe . Boston. St." contains statutes on "Trust. . Lansing." For information generally as to trust tary of State. dale of inquiry by the author directed to I >epartment oi See Revised Laws of Minn. Concord. Minnesota. Deposit and Security Companies. Chap. Helena. pamphlet copy of which may be secured from Secretary of State. tana. New Hampshire. Paul. 15 of General Corporation Law.STATU! ES 265 Pamphlet on "Statutes Relating to Trusl Companies. "Laws of New Jersey re- latingto Banks and Banking. Missouri. Jackson. Michigan. New Hampshire. Lincoln. City. Not available in pamphlet form on Massachusetts. Pamphlet on Corporation Laws contains statutes pertaining to "Trust Deposit and Security." Secretary of State. Mon- Montana. Trust powers of banks are contained in Sec. Trusl Companies and Building and Loan Associations." Banking Department." Bank Commissioner. Nevada. Pamphlet of Laws relative to "State Banks. ing. and Security Companies. company statutes. Minn. Jefin booklet Mississippi. Nevada." Board of Bank G >mmissioners. Neb. Pamphlet. companies address Banking Department. Carson Nebraska. Mississippi. "Banking Laws. 58 and Session Laws of 1911 for trusl Banking. New Jersey. Savings Banks. Pamphlet entitled "Mississippi Banking Law. Pamphlet on Corporation Laws conSecretains statutes pertaining to "Trust Companies." Bank Commissioner. : ferson City. Trust Company statutes are contained Missouri. (1905).

New Mexico. Superintendent of Banking Department. Oklahoma City.266 TRUST COMPANY LAW . Banking and Railroads. New Mexico." Oregon. Trust Companies and Building and Loan Associations. Banking." Insurance. North Dakota. Deposit Corporations." State Corporation Commission. Raleigh. Trenton. Department of Banking and Jersey. Statutes on "Organization and Management of Annuity Safe Deposit Surety and Trust Companies" are contained in pamphlet entitled. Philippine Islands. North Carolina. Savings Banks." Secretary of State. New York. "Laws Regulating Corporations. Provisions pertaining to "Trust Corporations" are contained in pamphlet of corporation . Dakota." Corporation Commission. Oregon. Trust company provisions are contained in pamphlet of "Banking Laws. North New York. Bismarck. Santa Fe. Leaflet containing general corporation law under which trust companies are organized and provision for double liability of stockholders in trust companies. Oklahoma. State Banking Department. Oklahoma. Trust company laws were not available in pamphlet form on date of inquiry by the author. New Pamphlet: "New Mexico Laws relating to Banks of Discount and Deposit. Pamphlet copy of "Laws Relating to State Superintendent of Banks. Albany. except Insurance. See General Code of Ohio and subsequent session laws. Salem. Ohio. Pamphlet copy of Banking Laws containing provisions pertaining to Trust Companies. North Carolina.

Pennsyl- vania. / Secretary of State. Austin. C. Montpelier. Nashville. Utah. of the State of South Carolina. Vermont. Laws'. SecTennessee. . of State.) Banking DiviRichmond. to Banking. 'e'rmont. ( "Corporation Page20." Commissioner of Insurance and Banking. Olympia. Pickens. dependent Life Building." etc. Commissioner of Banking. Pennsylvania. and "Banking Laws. D. South Dakota. Rhode Island. Tennessee. Rhode Island. Trust and Guaranty Associate >n" in pamphlet of "Corporation Laws. "State Banking Laws of Pamphlet: Texas. Salt Lake City. Utah. Texas." Pamphlet copy of Banking Law. 1015-1'). see page 69. Secretary tained in pamphlet on "Corporation Laws. Harrisburg. In retary of Tennessee Bankers' Assocation. Washington. Provi dence." Secretary of State." Washington. Pamphlet entitled "Banking Laws of Rhode Island.STA l I 2< . Secretary of State. State Corporation ginia. Superinten dent of Public Documents." Bank Commissioner's Office. Texas. containing Pamphlets Virginia. Pamphlel copy of "Digest and Sup plement of Laws Relating to Banks. Pierre. Pamphlet entitled "Banking Laws South Carolina." (For trust company powers. Trust Companies. "Loan." sion. Pamphlet copy of "Laws Relating South Dakota.) State Bank Examiner. Trust Company statutes are conWashington. South Carolina.7 act enacted by the Philippine Commission. Pamphlet of General Corporation Laws. VirCommission.

Pamphlet: "Banking Laws. "Trust Company and Trust and Savings Banks. ." Commissioner of Banking. Madison. Wyoming." State Wisconsin." State Bank Examiner. Banking Department. Wisconsin. West Virginia. West Virginia." Laws are contained in pamphlet of corporation laws. Secretary of State.268 TRUST COMPANY LAW Pamphlet: "Banking Laws. Cheyenne. See also pamphlet on "Hanking Laws. Charleston. Wyoming.

shall not be less than four hundred thousand dollars. and in a city of more than four hundred thousand inhabitants shall not be No corporaless than live hundred thousand dollars. (1913) stock of any trust Capital. and such payment shall be . GENERAL COUNSEL. shall not be less than two hundred thousand dollars. shall not be less than fifty thousand dollars. shall not be less than one hundred thousand dollars. in a city of more than six thousand and not more than fifty thousand inhabitants. shall not be less than three hundred thousand dollars: in a city of more than three hundred thousand and not more than four hundred thousand inhabitants. AMERICAN BANKERS' ASSOCIATION § 1.DRAFT OF "MODEL TRUST COMPANY LAW. in a city of more than fifty thousand and not more than two hundred thousand inhabitants." PREPARED BY MR. The capital company organized under this act in a place having a population of six thousand inhabitants or less. THOMAS B. tion organized under this act shall create more than one class of stock. in a city of more than two hundred thousand and not more than three hundred thousand inhabitants. PATON. The entire capital shall be paid in cash before any trust company shall be authorized to transact any other business than such as relates to its formation and organization.

company. § 2. not less than four-fifteenths shall at all times be kept on hand in lawful money of the United States.270 certified to the TRUST COMPANY LAW bank commissioner under oath by the president. such trust company shall not increase its liabilities by making any new loans nor make any dividend notify any trust of its profits until the required re- serve has been restored. The remainder may consist of balances subject to demand draft which the trust company may have with any National bank. State bank or trust company in a city designated in the National banking laws as a reserve city or a central reserve reserve fund of any trust city. Every trust company shall at all times maintain a reserve fund of at least fifteen per centum of its aggregate deposits. verified by the oath of its treasurer. and the treasurer or secretary of the trust Reserve. transmitted to the commissioner within ten days after . Of such fifteen per centum. The bank commissioner if shall fall company whose reserve fund shall below said such trust company shall fail for thirty days thereafter to make good such reserve fund. the bank commissioner may take the lawfifteen per centum and ful steps to wind up its business. Whenever the company shall be below the required fifteen per centum. Supervision. which report shall exhibit in detail and under appropriate heads. the resources and liabilities of the trust company at the close of business on any past day Such report shall be specified by the commissioner.' Every trust ized or doing business in this State company organshall make to the bank commissioner not less than five reports during each year. § 3. according to form which may be prescribed by the commissioner.

Every trust company which fails to make and transmit any such report when requested by the commissioner paper shall forfeit it to the State ten dollars for each day that The hank commisand examine every trust company semiannually or oftener and may examine its books and papers in the presence of one or more of its officers. in the course of such examination. In States where no such provisions exist. the laws now provide a bank department. he may apply to a judge of the court who shall cause such person to come before him and inquire into the facts set forth in such application and may thereupon commit such person to jail until he shall comply with such request. (Note: In the majority of States. would of course not he necessary in such States. the proposed statute would probably have to go further and . may compel the attendance of witnesses and production of books and papers by suitable process. with a bank commissioner or superintendent empowered to supervise and examine trust companies and receive reports from them. but the hank commissioner shall not impart any information obtained by him delays to transmit such report.i 271 request therefor from him and shall be published in such form as he may prescribe in a news- in the county where the trust company is located. which is taken from the law of Connecticut. except in so far as in the may become necessary performance of his duties. to ascertain whether it has been managed according to law may examine any persons under oath in relation t<> its affairs. which oath said commissioner may administer. A provision such as above.MODEL LAW the receipt of . visit sioner shall . and in case any person shall refuse to furnish any information requested by the commissioner under authority of any provision of this section.

the making of reports and examinations and also procedure where conditions were found to be unsatisfactory. investments affairs of the trust and general directors. in his own right and unrectors pledged. Qualification of Directors. in such form as may be prescribed liabilities and and the various . during his whole term of service.272 TRUST COMPANY LAW provide for the creation of a bank department. It shall be the § 5. The place of any director who ceases to be the owner of the required number of shares of stock.) § 4. papers. company of which they are with the special purpose of verifying the assets and investments with the book requirements thereof. Within ten days after the completion of each of such examinations a report in writing. at least ten shares of the capital stock of the trust company of which he is a director. Every director must own. with powers and duties of commissioner. fully into the books. accounts. or who becomes in any other manner disqualified shall ipso facto become vacant. the correctness of accounts and generally as to the con- company with reference trusts to its assets which it is executing. duty of the board of directors of every trust company at least once in each year to examine. Such directors shall have power to employ such assistance in the making of such examination as they may deem necessary. or to cause a comits mittee of at least three of members to examine. and into such other matters as the bank commissioner may require. be a citizen of the United States and at least three-fourths of the di- must be residents of the State in which the trust company is located during their continuance in office. Examination by Directors. deter- mining the market value and yield of the dition of the trust securities held. Every director must.

shall be made to the trust company and be office filed with its records and a duplicate 1 filed in the £ the directors of any make. trust company shall fail to within the time specified. profits. which penalty may be recovered through an action brought by the attorney-general against such trust of the people of the State. so long as the market value of such collateral shall exceed bilities secured in by twenty per cent the total liaeach case by such collateral. The ities to any or firm. surplus. or cause to be made. i. such trust kit to the people of the State one company shall for hundred dollars for each day such report shall be delayed. but no . sworn to by the directors making the same. The total liabil- trust company of any person. and undivided § 7. company in the name The moneys forfeited by this office when recovered. Every trust company may receive deposits subject to check or to be repaid in such manner and on such terms and with or without interest as may be agreed upon by the depositor and the trust company. shall at no time exceed ten per cent of the amount of the capital stock of such trust company actually paid in and its surplus and undivided profits combined. law 273 by the hank commissioner. and fde such report of examination in the manner and of the bank commissioner. for provisions of this section shall not apply to loans secured by collateral. shall be paid into the State treasury to be used to defray the expenses of the of bank commissioner. a. § 6. corporation. money borrowed. provided that no trust company shall incur a total deposit liability in excess of ten times its capital. including in the liabilities of a firm the liabilities of the several members thereof. Section. Restrictions on Loans. Deposits.modi.

so long as the market value of such collateral shall exceed by twenty per centum the total liabilities in each case secured by such collateral. shall at no time exceed twenty per cent of the capital. count upon the pledge of No trust own stock. surplus and centum five per undivided profits nor permit the combined obligations to it of all its directors at any one time to exceed twenty per centum of such capital. surplus and undivided rector to permit any single dito an amount exceeding Provided that these requirements shall not apply to loans secured by collateral. surplus. but such loans on collateral to any one diprofits: rector shall at no time exceed ten per centum of the combined capital. indorsed or guaranteed by any of its executive officers or clerks. d. corporation. than five shall violate any of the foregoing provisions of this section shall forfeit to the State not less than three thousand dollars hundred dollars nor more Every for each offense. or firm. company shall make any its loan upon or discount any paper made. Every trust company which e. officer or clerk is a No trust company shall become obligated to it of its combined capital. or by any partnership of which any such member. accepted. No trust company shall make any loan or disb. and the total loans to any one person. c. and undivided profits combined of such trust company. surplus and undivided profits of such trust company. including in the liabilities of the firm the liabilities of the several members thereof.274 TRUST COMPANY LAW loan on collateral shall at any time exceed twenty per cent of the amount of the capital stock of such trust company profits actually paid in and its surplus and undivided combined. .

shall any sign at the place where his or its business is transacted having thereon such words or any other word or words indicating that such place or office is the place or office of a trust company. other than a corporation authorized by the laws of this State to do the hnsincss of a trust company and subject to the supervision of the bank commissioner as make use of the word or provided by such words "Trust" or "Trust Company" as part of any artificial or corporate name or title. or as in company. nor make use oi laws. Every person or persons violating the provi- sions of this section cither as an individual or an interested party in any association." No person. firm or corpor at ion. nor make use of or circulate any written or printed. association. books and papers of any person. LAW 275 official of a trust company responsible for the violation of any provision of this section shall be liable to such trust company in a civil suit for any damages resulting therefrom and shall he lined not more than one hundred dollars or imprisoned not more than one year or both. Company. association.I. firm or cor- poration whom he has reason to suspect is violating the . Unlawful Use of Words "Trust" or "Trust § 8. nor transact business in the or of the bank commissioner might lead the opinion the public to believe. or partly written or partly printed matter whatever having thereon any such words or any other word or words indicating that the business conducted is that of a trust company. that his or its business is that of a trust way way or manner manner as to lead of a trust company or in such the public to believe.MmIH. The bank c< immis- sioner shall have authority to examine the accounts. firm or corporation shall be punished by fine of not less than one hundred dollars nor more than one thousand dollars.

to .Annual Statements. except that where. It shall be the § 10. every trust company trust accounts. Semi. receiver. be fully specified in and under the account of the particular trust to which it belongs. § sides shall 9. the same are made in the interim of board meetings. Trust Funds Not to be Mingled. upon the receipt thereof. be property can be readily identified at any time by No investments first or loans of trust funds shall made without being authorized by the board of directors. administrator. so that all trust funds and any person. Etc. and all deposits by it of such funds in any banking institution shall be deposited as trust funds.27l) TRUST COMPANY LAW provisions of this section and to summon and examine to administer. or other trustee. executor. be indorsed and transferred to it as trustee. guardian. assignee. Every security in which trust funds or property are invested shall at once. in pursuance of any general authority. under oath. and immediately entered proper books as belong- ing to the particular trust whose funds have been inAny change in such investment shall vested therein. duty of every trust company. they must be reported at the next meeting of the board. as the case may be. in a trust capacity shall keep separate hooks for it funds and property held by at all times be kept separate from the funds and property of the corporation. and not in the in blank or otherwise. to its credit and as trustee and not otherwise. beginning at a period six- months from the creation of the particular trust. all BeAll its general books of account. which he person or is is empowered any whom he may have reason to believe has violated a participant in any violation of the provisions of this section.

or in any bonds. it shall be unlawful for any trust company acting in behalf of any cestui que trust or beneficiary or in behalf of any estate which it holds as trustee or in any other § 11. fiduciary capacity. Tt shall be the duty of every trust company and of every director. otherwise provided in Trust funds. Except in case of loans secured by mortgage of real estate. double in value the amount loaned. I.MODI I. stocks or other securities which the savings banks in this State are. unless it is the instrument creating the trust. trust companies shall only be liable to the cestui que trust or beneficiary for the exercise of reasonable care and diligence. or any part thereof. Investment of Trust Funds. to purchase any securities or assets owned. Confidential Information. in its own right. offi- . Except as to minors and persons under disability. In the making of invest- ments. §13. within sixty days after receipt of the same shall be deemed and taken as an agreement to the correctness of the account rendered.W\ 27? make to the cestui que trust or beneficiary a semi-annual statement in writing showing in detail the receipts and disbursements and the general condition of sueh trust. city. or may be invested in such may mortgages or bonds or loans of the United States or of this State or of any town. by such trust company § 12. Unlawful Sales by Trust Company. or may be deposited in trust companies or savings banks in incorporated in this State. the failure by any cestui que trust or beneficiary to disapprove or object to such written statement. school district or other political subdivision thereof. village. be loaned on the security of mortgages on unincumbered real estate in this State. or may be authorized by law to invest in.

officer or agent violat- ing this provision shall be fined one hundred dollars . Any director. it to keep secret. confidential and is inviolate.2/8 cer TRUST COMPANY LAW and agent thereof. save only such as may be compelled by law. for each offense. the affairs of all persons whose business entrusted to to either in a banking or trust capacity and make no disclosure thereof.

" ARTICLE V Trust Companies Section 180. When corporate existence begins. Notice of intention to organize. Submitting organization certificate for examination. organization certificate. In Article is of the "Banking Law. commencing busi- . 2 of this chapter "trust com- V defined as follows "The term. condi- tions precedent to ness." Sec. receiving deposits of money and other personal property.' when used in this chapter. contained in Chapter 369 of the Laws pany" of 1914 as Article I. Section 182. Section 181. acting as trustee in the cases prescribed by law. 'trust company. and issuing its obligations may therefor. Incorporation. Section 183. means any domestic corporation formed for the purpose of taking.: TRUST COMPANY LAW OF NEW YORK The on April trust 16. and lending money on real or personal securities. accepting and executing such trusts as be lawfully committed to it. company law of is New York as revised 1914.

Rate of interest. Section 190. Interest on collateral less demand loans of not dollars. Section 198. Dividends. Section 195. Section 193. Restrictions on investments of capital. Change of location. on loans and purchases of securities. Appointment in fiduciary capacities. Section 194. Powers of panies. Section 185. Section 200. exercise of fiduciary powers. Restrictions on liabilities of one person and Section 191. Section 203. Section 187. Restrictions on taking and holding real estate. Surplus fund. Section 192. Restrictions on branch funds. Section 199. Section 186. Section 201. Section 196. Restrictions as to entries in books. Restrictions on power to receive deposits of funds paid into court. Section 204. Deposit of securities with superintendent. Interpleader in certain actions. offices. specially chartered trust com- Section 188. General powers. Additional powers of certain trust companies. . than five thousand Section 202. Reserves against deposits. costs. Restrictions on deposit of trust company's Section 197. Section 205. Section 189. Calculation of earnings for divided period. Restrictions on power to contract or to accept or execute trusts. Deposits of minors and trust deposits and deposits in the names of more than one person.280 TRUST COMPANY LAW Section 184.

Section 216. certificate in duplicate. classification tenure. Reports to superintendent. Amount When persons shall subscribe and acknowledge an organization state: 1. vacancies. Section 221. Restrictions on officers. Section 208. § 180. divi- dends and Section 220. capital impaired. Organization Certificate. Annual report of unclaimed deposits. Trust interest. Section 219. pay expenses incurred in its behalf by superintendent. Section 207. Animal meeting of stockholders. Communications from banking depart- ment. seven or more persons may Form Such a corporation to be known as a trust company. Prohibition against encroachments on powers. Section 209. Section 211. Section 210. Failure to elect. . Section 214. of Capital Stock. directors and em- company to ployes. Section 218. Section 223. Monthly meetings of directors.NEW VORK Section 206. which shall specifically The name by which the trust company is to be known. 281 Rights and liabilities of stockholders. Qualifications of directors. Assessment of stockholders when . authorized by the superintendent of banks as provided by section twentythree of this chapter. Section 215. Section 213. Section 212. Section 222. Section 217. Examinations by directors. Incorporation. Preservation of books and records. Reports of directors' examinations. Oath of directors. Number of directors . Annual meeting of directors.

(d) Five hundred thousand dollars. The amount of its capital stock. 5. Filing. if the is where business is to be transacted a city the population of which exceeds twenty-five thousand but does not exceed one hundred thousand. which capital stock shall to not less than (a) One hundred thousand business is dollars. if the place is where its business to be transacted a city the popula- tion of which exceeds one hundred thousand but does not exceed two hundred and fifty thousand. § 181. which may be per- petual. The names and places of residence of the in- corporators. Such certificate may provide for the manner in which the stock of the corporation may be transferred and for the number of directors necessary to constitute a quorum. 6.: 282 2. A declaration that each incorporator will ac- cept the responsibilities and faithfully discharge the if duties of a director therein elected to act as such when authorized by the provisions of this chapter. its to be transacted is a city the popula- which exceeds two hundred and fifty thousand. (b) place One hundred and its fifty thousand dollars. and the numamount is ber of shares into which such capital stock shall be divided. if the place where its to be transacted an incorporated or unincorporated village or city the population of which does not exceed twenty-five thousand. The term of its existence. (c) Two hundred thousand is dollars. 3. TRUST COMPANY LAW The place where its business is to be transacted. . business is if the place where tion of 4. Notice of Intention to Organize.

the amount of and its location as Set forth in the organization certifii t cate. office The original of such notice shall be filed in the of the superintendent of hanks after the date of execution. be served upon each state hank and trust company organized and doing business in the village. Submitting Organization Certificate to Superintendent. to . specified as the location of the proposed trust company by mailing such copy. Notice of Intention. Proof of Publication and Service of § 182. and a copy thereof shall he published at least once a week for four successive weeks in a newspaper designated by the superintendent as provided in section twenty of this chapter. . the proposed incorporators shall sign a notice of intention to organize Mich trusl comPublication and Service Upon pany which shall specify their names. such publication to he commenced within thirty days after such designation. proposed corporation.said banks and trust companies.NEW YORK Existing Banks and Trust Companies. postage prepaid. if in a city not divided into boroughs. After the lapse of at leasl twenty-eight days from the date of the first due publication of the notice of intention to organize and within ten days after the date of the last publication thereof. the name of the ^ capital stock. executed in duplicate. borough or city. the organization certificate. At the time of executing such organization certificate. within sixty days A copy of such notice shall. shall be submitted to the superintendent of banks at his office together with affidavits or other evidence satisfactory to him showing due publication and service of the notice of intention to organize prescribed in section one hun- dred eighty-one of this article. at least fifteen is filed days before the organization certificate with the super- intendent for examination.

subscribed and sworn to by its two principal officers shall have been filed in the clerk's office of the county in which All of its capital stock shall its principal office is located and a certified copy thereof in the office of the 2. residence. Con- ditions Precedent to Commencing Business. . and transact such other business But the trust company until no other business have been fully paid in cash and an affidavit stating that it has been so paid. or of any city. : 2S4 TRUST COMPANY LAW § 183. town. Deposit of Securities with Superin- Every trust company shall. . village or free school district in this state. 4. superintendent of banks interest bearing stocks or bonds of the United States or of this state. countv. § 184. verified by two of its principal officers. When the superintendent shall have end* used his approval on the organization certificate. giving the name. superintendent filed in It shall list have its the office of the superin- tendent a of stockholders. It shall this article.. the corporate existence of the trust company shall' begin. and it shall then have power to elect officers its as relates to shall transact 1. post-office address and number of shares of stock held by each stockholder have made the deposit with the superintendent required by section one hundred eighty-four of 3. keep on deposit with the tendent. The superintendent shall have duly issued to it the authorization certificate specified in section twenty- four of this chapter. as provided by section twenty-three of this chapter. organization. When Corporate Existence Begins. until an order of the Supreme Court is obtained declaring the business of the trust company closed.

if its principal place of 2. Such securities shall be registered in the name of the superintendent of banks of the state of New York in trust for the creditors of and depositors with such and transfer. of business is dollars. to the amount in value of ten per centum of its capital stock. and to the disposal of the proceeds thereof by the superintendent only on the order of a court of competent jurisThe trust company. if its principal place located elsewhere in this state. every trust company shall.. tinue solvent and comply with the laws of the state. NEW YORK 285 authorized by the legislature to be issued. business is located in a city the population of which exlive ceeds one hundred thousand but does not exceed five hundred thousand Thirty thousand 3. may be permitted by the superintendent to collect the interest on the securities so deposited and from time to time to trust company and subject to sale exchange such securities for others. as provided by section thirty-five of this chapter. but not less in 1. if its principal place a city the population of which exceeds twenty-five thousand and does not exceed one hundred thousand Twenty thousand 4. so long as it shall condiction. subject to the restric- . any case than: One hundred thousand dollars. is if its principal place- of business located in a city the population of hundred thousand. and may examine and compare such securities as provided by section thirtysix of this chapter. § 185. powers conferred by the general and stock corporal inn laws. of business is located in dollars. In addition to the General Powers. which exceeds Fifty thousand dollars.

foreign or domestic. To accept trusts from and execute trusts for married women. or to secure such debts. bills discount and negotiate promissory notes. hold. 2. or through sales under any judgment.: 286 tions TRUST COMPANY LAW in this article. lend money on real or personal securities. coin and bullion . under any mortgage or bonds issued by any municipality. register and countersign cer. and to act as attorney in fact or agent of any person or corporation. To lease. body politic or corporation and in such capacity to receive and disburse money. or which the purposes of the corporation may require. in respect to their separate property. lawful purpose. buy and exchange. . and limitations contained following powers 1. have the To act as the fiscal or transfer agent of the United States. and to be their agent in the management of such property or to transact any business in relation thereto. to transfer. decree or mortgage held by it. and accept and execute any other municipal or corporate trust not prohibited by the laws 4. of exchange and other evidences of debt. 3. municipality. bonds or other evidences of indebtedness. for any tificates of stock. purchase and convey any and its all real property necessary in the transaction of busi- ness. To sell drafts. 5. To act as trustee of this state. body politic or corporation. foreign or domestic. and to receive deposits of moneys. or which it shall anywhere acquire in settlement or partial settlement of debts due the corporation by any of its debtors. of any state. securities or other personal property from any person or corporation upon such terms as the company shall prescribe.

To be appointed and to act under the order or appointment of any court of competent jurisdiction as trustee. To take. transfer. person of unsound mind or habitual drunkard . and the rents and profits 7. whether for the benefit of To act any such minor or other person. management and disposition of any estate. or which may be entrusted or committed or transferred to . domestic or foreign. wherever located. as fided to it may be granted or con- by any court of competent jurisdiction. guardian. receiver or committee of the estate of a lunatic. and in any other fiduciary capacity. corporation or party. of the estate of any deceased person. accept thereof. corporation. and execute any and all such legal trusts. or administrator with or without the will annexed .NEW YORK 6. trusts may so accept. accept and assignment. devise. or other authority by grant. real or personal. idiot. To take. 287 under the order or appointment of any court of competent jurisdiction as guardian. or any body politic. or the sale thereof. corporation. duties and powers in regard to the holding. bequest or otherwise. municipality or other authority and it shall be accountable to all parties in interest for the faithful discharge of every such trust. it execute any and all such and powers of whatever nature or description as may be conferred upon or entrusted or committed to it by any person or persons. and as depositary of any moneys paid into court. duty or power which 8. or by any person. receiver or trustee of the estate of any minor.or as receiver or committee of the property or estate of any person in insolvency or bankruptcy proceedings to be appointed and to accept the appointment of executor of or trustee under the last will and testament.

or any surrogate. bonds and mortgages and other securities and when moneys or securities for moneys are borrowed or received on deposit. so it coming a member the capital stock thereof as will qualify for much of member- ship in such reserve bank. the bonds or trust or obligations of the it company may be given therefor. have no right to issue bills to circulate as money. exchange. not exceeding one year. officers and stockholders shall r . pursuant to an act of Congress. 288 it TRUST COMPANY LAW it by order of any court of competent jurisdiction. manage. hold and dispose of according to the terms of such or vested in power any property or estate. bills of 9.. To accept for payment at a future date. 11. mortgages. upon deposit for safe keeping. approved December twenty-three. for hire. for the purpose of beof a federal reserve bank. 12. To purchase. entitled the "Federal Reserve Act" to become a member of such federal reserve bank. and to let out receptacles for safe deposit of personal property. real or personal. but shall 10. take. not in conflict with the laws of this state. bonds. and other personal property. and to have and exercise all pow ers. upon terms and conditions to be prescribed by the company. drafts it by its customers and to issue letters of credit authorizing the holders thereof to draw drafts upon it or its correspondents at sight or on time. and to receive. securities and valuable papers of any kind. stocks. To purchase and hold. which are conferred upon any such member by the Federal Reserve Act. which may be the subject of any such trust or power. plate. or for investment. nineteen hundred and thirteen. . jewelry. Such trust company and its directors. drawn upon To receive. invest in and sell stocks.

as Executor and Fiduciary Capacities. Powers of Certain Trust Every trust company which at the time and exercises the proto this act takes effect lawfully possesses power. Any trust company may be appointed guardian. and to guarantee or insure the title to real estate to persons interested. the court or officer authorized to -rant letters testamentary in this state. by reason of defective title or other encumbrances of or upon. in such real estate or in mortgages thereon. on theapplica- . Provisions Relating to Appointment of of and Exercise Powers 1. Every trust company incorporated by a special law shall possess the powers of trust companies incorporated under this chapter and shall be subject to § 187. examine titles to real estate. hereafter have or exercise such power. Additional Companies. with or without the will annexed. Trust Companies. Powers of Specially Chartered such provisions of this chapter as are not inconsistent with the special laws relating to such specially chartered company. for hire. to cure and furnish information in relation thereto. to duties imposed upon to all all liabilities them by any law oi this and state and the provisions of this chapter relating to trust companies. such real estate. trustee or administrator. § 188. shall continue to possess such power. Executor. its successor by merger.NEW VORK continue to be subject. but no other trust company shall againsl loss. Guardian. shall. When company appointed executor in any last will ment. -rant letters testamentary thereon to such cor- poration or to 2. however. § 186. upon the proper apis Other any trust and testain plication. trustee or administrator.

but such appointments shall be made upon such notice. his appointment limitation of rogate or judge. When application is made to any court or officer having authority to grant letters of administration with the will annexed upon the estate of any deceased person. such court or officer may any party interested poration. and upon such reduced bond or security to be given by such person. No appointment so made shall be deemed to increase the number of persons entitled to full compensation beyond the number so entitled under as the court. shall prescribe. to any such cor- Any court or officer of guardianship of any infant having authority to grant letters may upon the same appli- . and there is no person entitled to such letters who is qualified. as the court. trustee or administrator with or with- person may be under such powers and upon such terms and conditions as to deposit of assets by such person. making the appointment. grant such letters of administration with the will annexed. Whenever a is joined with such trust company in any appointment as guardian. as is person. competent. in the estate. surout the will annexed. with such trust company. or otherwise. willing and able to accept such adat the request of ministration. to the persons interested in the estate or fund and on the consent of such of the principal legatees or other persons interested in the estate or fund making the appointment deem proper. surrogate or judge shall the terms of the will or deed creating the trust or ap- pointing a guardian or authorized by law.290 tion or consent of to TRUST COMPANY LAW any person acting as such or entitled such appointment and in the place and stead of such company may he joined with any person so acting or entitled to such appointment. or such trust required by law.

committee or depositary or in any other fiduciary capacity. All Depositary for moneys paid into court. Committee of lunatic. or to act in any may other fiduciary capacity. or of any other state or of the United States. trustee or committee.NEW cation as is YORK. nor when appointed executor. guardian. appoint any snch corporation to he such trustee. guardian. appoint any such corporation as the guardian of the estate of such infant. trustee or committee. The court. idiot or habitual drunkard. No bond or other security. receiver or committee. Any court. trustee. guardian. the comptroller of the State of New York. shall corporation for or in respect to any trust. Whenever any such poration shall be designated by the comptroller as a depositary for funds and moneys paid into court. as provided cor- by the code of civil procedure. Any conn having jurisdiction to appoint a trustee. 3. Receiver. et cetera. 4. or action. except as be required from any such hereinafter provided. may be deposited with any such corporation that has been designated a depositary by 5. 6. administrator. it shall give to the people of the state a bond in the form and manner Bonds. having jurisdiction to appoint a committee or trustee or a receiver in insolvency or hankruptcy proceedings or in any other proceeding. or to make any fiduciary appoint ment. prescribed in this chapter. 291 required by law for the appointment oi a guardian for such infant. or officer making snch ap- . moneys brought into court by order or judgment of any court of record of this state. receiver. under state or federal law. re ceiver or committee of the estate of a lunatic. may appoint any such corporation to he such receiver.

the debts from such corPreference. Investments. administrator. trustee. and by any trust company chartered by special act. eighteen hundred and ninety-two. committee. 7. which such court or officer might lawfully require if such executor. depositary. may make orders respecting such -trusts and require any trust company to render all accounts. or liquidated by the superintendent of banks or otherwise. re- ceiver. receiver. prop- erty and effects of the corporation shall be absolutely liable. receiver. guardian. guardian. administrator. upon proper application. were a natural person. Court orders* accounts. guardian. by the legislature or the court. as executor. If dissolved poration as guardian. shall be entitled to priority of payment from the assets of such corporation on an equality with any other priority given by this chapter. Such court or officer 9. committee or depositary.2'>2 TRUST COMPANY LAW pointment may. personal or testamentary trustee. to give such security as to the court or officer shall seem proper. or upon failure of such corporation to give security as required. administrator. All investments of money re- ceived by any such corporation. trust. committee or depositary. require any corporation. executor. . which shall have been so appointed. prior to May eighteen. shall be at its sole risk. committee. deposi- tary or such trust company acting in any other fiduciary capacity. may remove such corporation from and revoke such appointment. when unless the investments are such as are proper made by an individual acting as trustee. executor. administrator. or otherwise. and for all losses of such money the capital stock. or such as are permitted in and by the instrument or words creating or denning the 8. trustee.

Restrictions on Taking and Holding Real § 189. administrator. oath shall be required. admin- guardian. Estate. the amount thereof not so expended or distributed shall be accumulated by such trust company for the benefit of the parties interested in such trust fund. which shall be collected and received by a trust company acting as executor. or any part thereof. trustee.MEW VORK 10. interest shall be allowed by such trust company at not less than the rate of two per centum per annum until the moneys so received shall tary of expended or distributed. Upon the appoint- ment of such istrator. it as an office. no Interest. On all sums of money not less than one hundred dollars. No official oath required. or as a deposi- moneys paid into court. or . shall be conveyed to it directly by name and the conveyance be duly immediately recorded. in the office of the proper recordis ing officer of the county in which such real estate Every parcel of real estate purchased or acquired by any trust company shall be sold by it within five years ol the date on which it shall have been acquired unless: There shall be a building thereon occupied by 1. guardian. receiver or committee under the appointment of any court or officer. 11. If such interest moneys. shall not annually be expended or distributed pursuant to the terms or provisions of the trust under which such moneys are held. trustee. official trust company as such executor. receiver or committee. or in any fiduciary capacity under such appointment. All real estate purchased by any trust company or taken by it in settlement of debts due it. located. and shall be added to the principal to constitute a new principal upon which interest shall thereafter be computed.

county.: 294 2. or of a corporation liability to T subject to the jurisdiction of a public service commission of this state. apply to loans or investments in the interest bearing obligations of. the United States. Purchases of Se§ 190. corporation or body by acceptances of drafts for. or of a municipal or railroad corporation. TRUST COMPANY LAW of The superintendent of banks. shall have extended the time within which such sale shall be made. partnership. this state or any city. (b) If such trust company is located in a borough having a population of two millions or over. partnership. such politic. the total such trust company. or the discount or purchase of the notes. unincorporated association. Liabilities to Trust Company of subject to the Any One 1. . of any state other than the State of New York. town or village of this state. individual. and the total liabilities to such trust company of any individual. partnership. will (a) The restrictions in this subdivision shall not to. its curities and Total Person. unincorporated association. unincorporated association. cor- poration or body therein politic. including any extension of credit to such individual. Restrictions on Loans. A trust company provisions of this article Shall not directly or indirectly lend to any individual. with the following exceptions poration or body politic. by means of letters of credit or partnership. or of any foreign nation. bills of exchange or other obligations of. may equal but not exceed twenty-five per centum of the capital and surplus of such trust company. unincorporated association. on application board of directors. an amount which. cor- exceed one-tenth part of the capital stock and surplus of such trust company.

NEW Vni'K 295 or of any other corporation or body politic. or provided such liabilities in excess of ten per centum of such capital in and surplus. or of a municipal or railroad corporation. and not excess of an additional thirty . provided such liabilities are upon drafts or hills of exchange drawn in good faith against actually existing values or upon commercial or business paper actually owned by the person negotiating the same to such trust company. or of any f< >reign nation. or of a corporation subject to the jurisdiction of a public service commission of this state. are secured by collateral having an ascertained market value of at least fifteen per centum more than the amount of the liabilities so secured. (c) If such trust company is located elsewhere in the state. mav equal hut not exceed forty per centum of the capital and surplus of such trust company. and not in excess of an additional fifteen per centum of such capital and surplus. or of any other corporation or body politic. and are endorsed by such person without limitation. or provided such liabilities in excess of ten per centum of such capital and surplus. provided such hills liabilities of exchange drawn in good faith are upon drafts or against actually existing values. the total liability to such trust company of any state other than the State of New York. unincorporated association. and are endorsed by such person without limitation. company of any individual. or upon commercial or business paper actually the . may equal but not ex- ceed forty per centum of the capital and surplus of such and the total liabilities to such trust trust company . partnership.same to Mich trust owned by the person negotiating company. may equal hut not exceed twenty-five per centum of the capital and surplus of such trust company.

by two or more individuals. ten per 3. of any partnership or unincorporated association to a trust company there shall be included loans all liabilities of its individual members and all made for the benefit of such partnership or unin- corporated association or any any corporation cluded all to a trust member thereof. collateral to the proposed . but not jointly. and any loans made for his benefit or for the benefit of such there shall be included partnership or association. This subdivision shall not be construed to render unlawful the continued holding of any securities heretofore lawfully acquired. make any loans secured by the stock of another moneyed corporation if by the making of such loan the total stock of such other moneyed corporation owned and held as collateral security by it will exceed 2. and of company there shall be in- loans made for the benefit of the corporation. are secured by collateral fifteen having an ascertained market value of at least per centum more than the amount of the liasecured. Shall not centum of the moneyed corporation.296 TRUST COMPANY LAW per centum of such capital and surplus. or any of them. bilities so (d) In computing the total liabilities of any in- dividual to a trust all company liabilities to the trust company of any partnership or unincorporated association of which he is a member. total capital stock of such other Shall not make any loan upon the securities of one or more corporations the payment of which loan is undertaken in whole or in part severally. firms or corporaif tions : (a) the prospective borrowers or underwriters be obligated absolutely or contingently to purchase the securities.

including any renewal thereof. liens and incumbrances shall real estate as exceed two-thirds of the appraised value of such found by a committee of the directors of such trust company. but this provision shall not prevent the acceptance of any such real estate securities to secure the payment I of a debt previously contracted in good aith. unless they shall have paid on ace unit of the purchase of such securities an amount in cash or its equivalent equal to the several at least amounts if for twenty-five per centum of which they remain obligated in completing the purchase. ex- ceeds twenty-five per centum of the capital and surplus of the trust company. lien or incumbrance. . liens and incumbrances exceeds ten per centum of the capital and surplus of such trust company. lien or incumbrance. (d) if the amount. including all prior mortgages. indirectly or contingently. by agreement. if -the amount unpaid upon such prior mortgage. Shall not make a loan. gage taken Eveiw mortgage and every assignment of a mortor held by such trust company shall immediately be recorded in the office of the clerk or the proper recording officer of the county in which the real estate described in the mortgage is located. for the repayment of the proposed loan or any part thereof. exceeds the period of one year. 4.NEW YORK 297 loan. or if the amount so secured. express or implied. (b) the trust company considering the making of the loan be liable directly. directly or indirectly. (c) if the term of the proposed loan. or the aggregate amount unpaid upon all prior mortgages. under any circumstances. upon the security of real estate upon which there is a prior mortgage.

clerk or rectors thereof filed in the office of the trust company or embodied in a resolution adopted by a majority vote of . Shall not. nor shall any of directors. Any trust from com- pany violating any of the provisions of of the loan or purchase. TRXIST COMPANY LAW its Shall not. unless security or purchase shall be necessary to prevent loss upon a debt previously contracted in good faith. within six months its the time of purchase or acquisition. Shall not security of the make any loan or discount on shares of its own capital stock.298 5. or otherwise disposed of. nor shall any officer thereof. agents or servants. it. lend any sum of money to any officer. any money or property for the purpose of enabling any person to pay for or hold shares of its stock. amount of the loan. directly or indirectly. or be the the purchaser or holder of any such shares. and stock so purchased or acquired shall be sold at public or private sale. employe of the trust company without the written approval of a majority of the board of didirectly or indirectly director. for less than its face Every trust company or person violating the provisions of this subdivision shall forfeit to the people of the state three times the face value of the note or other evidence of debt so purchased. unless the loan is made upon security having an ascertained or market value of at least fifteen per centum more than the amount of the loan. officers. 6. directly or indirectly. Any trust company violating the provisions of this subdivision shall forfeit to the people of the state twice the 8. purchase or be interested in the purchase of any promissory note or other evidence of debt issued by value. this subdivision shall forfeit to the people of the state twice the amount Shall not knowingly lend. 7.

that this • limitation shall not apply to the ownership of the capital stock of a safe deposit company the vaults of which are office connected with or adjacent to an company. if first class. of Funds Paid Into Court. director. its make any loan exceeding in amount one-tenth of capital stock to any director thereof. however. which it would not be lawful for any individual to make. 10. Shall not invest or keep invested in the stock of any private corporation an amount in excess of ten per centum of the capital and surplus of such trust com- pany. directly or indirectly. exclusive of the director to is 299 whom the loan made. accept or execute.NEW York such hoard. for each offense. of such trust Power to Contract or to No trust company shall have any right or power to make any contract. Every trusl company or officer thereof violating this provision shall. lent. clerk or employe shall own control a majority of the stock of any other corporation a loan to that corporation shall be considered for the purpose of this subdivision as a loan to him. No trust company shall . Restriction on Power to Receive Deposits § 192.rfeil to the people of the state twice amount 9. or to accept or execute any trust whatever. provided. or such in any event. nor shall it purchase or continue to hold stock of another moneyed corporation if by such purchase or continued investment the total stock of such other moneyed corporation owned and held by it as collateral will exceed ten per centum of the stock of such other moneyed corporation. Accept or Execute Trusts. is to any officer thereof. Shall not. such trust if company located in a city of the and or officer. the fo. Restrictions on § 191.

Restrictions on Investments of Capital. duly authorized by law to be issued. after providing in a manner approved by the superintendent of banks for the gradual extinction of premiums or discounts on all such securities so as to bring them to par at maturity. Stocks or bonds constituting a part of the lawful investment of capital of any such corporation shall not be valued upon its books or entered in its reports to the superintendent of banks at a higher price or value than their investment value as determined bv amortization. How Valued. partnership. 1. except it be designated by a depositary the comptroller of the State of New York of moneys paid Nothing" in this chapter conto preclude the deposit. Amortization of Securities. unincorporated association or corporation. No trust company shall by any system of accounting or any device of bookkeeping. or in the stocks. or of any county or incorporated city of this state. bonds or other obligations of this state. however. Restrictions as to Entries in Books. not exceeding sixty per centum of the value thereof. The capital of every trust company shall be invested in bonds and mortgages on real property in this state otherwise unencumbered. § 194. directly or indirectly enter any of its assets upon its books in the name of any other individual. of any funds pursuant to the order or direction of a court of any other state or of the United States making such trust company a depositary of such funds. or under any title or designation that is not truly de- scriptive thereof.300 receive funds TRUST COMPANY LAW and moneys paid or brought into a court of the State of New York into court. tained shall. be in deemed any trust company organized under the laws of this state. § 193. or of the United States. .

Every trust company holding any funds or money paid into court shall keep a book or books in . and undivided profits applicable to the payment of dividends. such stocks and securities shall not be estimated at a valuation exceedfor the purpose of calculating the ing their present cost as determined by amortization. bonds and oilier interest bearing .NEW VORK 2. 301 The stocks. or adding to the cost of any such stock or security purchased at less than the amount payable thereon at maturity. but nothing herein contained shall prevent a trust company from carrying such stocks. enter or at any time carry on books the real estate and the building or it buildings thereon. loss. used by as its place or places of business. a sufficient sum to bring it to par at maturity.shall corporate securities purchased by a trust company be entered on its hooks at the actual cosl thereof. a sufficient sum to bring it to par at maturity. at a valuation exceeding their actual cost to such trust company. by deducting from the cost of any such stock or security purchased for a sum in excess of the amount payable thereon at maturity. trust company shall. Any trust company that refuses or neglects to obey such order shall be subject to a penalty of one hundred dollars for each day it so refuses or neglects. and crediting to profit and loss. Every its trust company shall conform its method books and records to such orders in respect thereto as shall have been made and promulgated by the superintendent pursuant to section fifty-six of this of keeping chapter. except with the written its approval of the superintendent. 4. and charging to profit and that is. 5. bonds and other interest-hearing corporate securities 3. on No its books at their market value.

if any. if any. the date of receipt. Restrictions on Branch Offices. also the date and description of each order for payment and the dates and amounts of payments thereunder and to whom paid also an account of each change of investment. from whom received. if any. of its in foreign countries. The superintendent shall have given his written that a trust approval. the title of the case. as provided in section fifty-one of this chapter. and a description of the securities or other property received. No trust company shall deposit funds with any other moneyed corporation unless the latter has been designated as a depositary for the . . for Violation. 2. provided that before any such branch or branches shall be opened or occupied: 1. shall transact place other than usual business at any principal place of business. Penalty § 195. Such book or books shall state the name of the court.302 TRUST COMPANY LAW which it shall make an exact account thereof. No its trust company its or any officer or director thereof. except company may open and occupy in the city in which its principal place of business is located one or more branch offices. and each addition of interest. the amount of money. either United States of America or § 196. The actual paid in capital of such trust company shall exceed by the sum of one hundred thousand dollars section one the amount required by hundred and eighty capital of this article for each branch opened. Restrictions on Deposit of Trust Comany pany's Funds. Any trust company having a combined and surplus of one million dollars or over may with the writ- ten approval of the superintendent open and occupy a branch office or branch offices in one or more places in the located without the State of New York.

authorized by the laws of the United States. Reserves Against Deposits. and the remainder shall consist of any form of currency. Fifteen per centum of such deposits if such trust company has an office in a borough having a population of two millions or over. United States gold certificates or United States notes. as follows 1. At least one-half of the reserves on hand shall consist of gold. Every trust company shall maintain total reserves against aggregate demand deposits. shall maintain at least four per centum of such deposits as reserves on hand. but not falling within subdivisions one or two of this section. shall maintain at least three per centum of such deposits as reserves on hand. Ten is per centum of such deposits.NEW YORK trust 303 company's funds by vote of a majority of the directors of the trust company exclusive of any director who is an officer. and trust companies located in cities of the third class and in incorporated and unincorporated villages. if such trust company located elsewhere in the state. is if such trust company located in a borough having a papula- tion of one million or over and less than two millions. and at least eight per centum of such deposits shall be maintained as reserves on hand. 3. first Trust com and second class. Thirteen per centum of such deposits. director or trustee of the depositary so designated. 2. § 197. and at least ten per centum of such deposits shall be maintained as reserves : on hand. and has not an office in a borough specified in subdivi- sion one of this section. other than federal panics located in cities of the reserve notes. . gold bullion. gold coin.

or the survivor of them. and free from the control or lien of all other persons. and shall be paid. When any deposit shall be made by any person describing himself in making such deposit as trustee for another and no other or further notice of the existence and terms of a legal and valid trust than such description shall have been given in writing to the company in the event of the death of the person so described as trustee. may maintain on deposit with such federal reserve bank such portion of its total reserves as shall be required of members of such federal reserve bank. and the receipt or acquittance of such minor shall be a and sufficient release and discharge for such deposit or any part thereof to the corporation. such deposit or any part thereof. When any deposit shall be made by or in the name of any minor. whom When name to be a deposit shall have been made by any person in the of such depositor and another person and in form paid to either. manner authorized by this section. and Deposits in the Names of More Than One Person. such deposit thereupon and any additions thereto made. together with the interest thereon to the per- son in whose valid name the deposit shall have been made. If any trust company and shall shall fail to maintain its total it reserves in the shall be liable to. by either . the same shall be held for the exclusive right and benefit of such minor. except creditors. Deposits of Minors and Trust Deposits § 198. together with the dividends or interest thereon. pay the assessment or assess- ments provided for in section thirty of this chapter. may be paid to' the person for the deposit was thus stated to have been made.304 If TRUST COMPANY LAW any trust company shall it have become a member as reserves of a federal reserve bank.

company. in if there be any per- son or persons. shall be held for the exclusive use of the persons so named. the court order amending the proceedings in the action by making such claimants parties defendant thereto. 1. all the property of such persons as joint become and the tenants. together with interest thereon. and be < interest as >ther depi >sit s of the same in and shall be paid by such trust company accord- . may. Interpleader in Certain Actions. not to pay such deposit with the terms thereof. make an same fund. not parties to the action.NEW of such persons. and such pay ment and the receipt or acquittance of the one to whom life such payment lease is made. for sufficient all re- payments made on account said company of of such deposit prior to the receipt by notice in writing signed by any one o\ in such joint tenants. The funds on deposit which are the subject of such action may remain same with such trust company to the credit of the action until final entitled to the class.shall be valid and and discharge to said company. judgment therein. shall he- same. Vi iKK 305 upon the making thereof. or to the survivor after the death of one of them. §199. and the court shall thereupon proceed to determine the rights and interests of the several parties to the action in and to such funds. and upon eight days' notice to the plaintiff and such claimants. and without proof as to the merits of the claim. who claim the on the petition of such trust which the action is pending. accordance Costs. actions against any trust In all company to recover for moneys on deposit therewith. . The remedy provided in this section shall be in addition to and not exclusive of that provided eight in section hundred and twenty of the code of civil procedure 2. and may paid to either during the time of both.

receiving. or which has been agreed to be paid thereon. Effect of Usury. discount or sale at not more than the current rate of exchange for sight draft. The purchase. trust exchange or other evidence of debt. reserve and charge on every loan and discount made. or the deposit be paid into court to await the final in controversy may determination of the action. Every company may take. and paid into court the trust posit shall cease. reckoning the days for which the note. discount or sale of a bona fide bill of exchange. bill or evidence of debt has to run. The knowingly taking. 3. such action two years from the time the excess of interest is taken. and may be charged upon the fund affected by the Rate of Interest. bill of §200. receive. action. and for such de- The costs in all actions against a trust com- pany to recover deposits shall be in the discretion of the court. shall not be considered . and such interest may be taken in advance. bill of exchange or other evidence of debt carries with it. or upon any note. or a reasonable charge for the collection of the same. in addition to the interest. the person paying the same or his legal representatives may recover twice the entire amount of the interest thus paid from the if trust is company taking brought within or receiving the same. If a greater rate of interest has been paid. when the deposit is so company shall be struck out its liability as a party to the action.306 TRUST COMPANY LAW final ance with the judgment of the court. note or other evidence of debt payable at another place than the place of such purchase. reserving or charging a greater rate of interest shall be held and adjudged a forfeiture of the entire interest which the note. interest at the rate of six per centum per annum.

pledged as collateral security for such re- payment. All earnings actually received during such in the period. may be agreed upon by the § 202. certificates of deposit. certificates of stock. bills of exchange. bonds or other negotiable instruments. previous calculation of earnings 2." approved June the third. Calculation of the Earnings for Dividend Period. Demand Loans of Upon ad- vances of money repayable on demand to an amount not than five thousand dollars made upon warehmw receipts. or other interest- . of a trust To determine company be included amount of gross earnings for any dividend period the following items may 1. less interest accrued last and unpaid included . § 201. Interest on Collateral Not Less Than Five Thousand less Dollars. and to provide for the circulation and redemption thereof. secured by pledges of United States bonds. any trust company may receive or contract to receive and collect as compensation for making such advances any sum which parties to such transaction. Interest accrued and unpaid upon debts owing to it secured by collateral as authorized by this article upon which no default of more than one year exists and upon corporate stocks.: NEW YORK as taking or receiving a greater rate oi six per 31 17 interest than centum per annum. bills of lading. eighteen hundred and sixtyfour. is The true intent and meaning trust of this section to place and continue such com panics on an equality in the particulars herein referred to with the national banks organized under the act of Congress entitled "An act t<> provide a national currency. bonds.

the and extraordinary. 3. real estate or other property 4. off. bonds or other interestbearing obligations purchased above par in order to bring them to par at maturity. any increase in the book value of an office building owned by it. Interest paid. provided the market value of such securities is at least equal to their present cost as determined by amortiza. expenses incurred and interest accrued upon its debts deducted at the last previous calculation of net earnings for dividend purposes 2. Any profits actually received owned by it Sums recovered on items previously charged 5. or accrued it. and the management of its affairs. upon which no default The sums added less to the cost of securities pur- chased for than par as a result of amortization. both ordinary in the transaction of its business. : . from the . . upon debts owing by 3.. The amounts deducted through amortization cost of corporate stocks. 308 TRUST COMPANY LAW it bearing obligations owned by exists. To determine the amount of net earnings for such dividend period the following items shall be deducted from gross earnings 1. All expenses paid or incurred. and only to the extent of such approval. less collection of its debts'. which building or a portion thereof is used by it as a place of business. and any amounts allowed by the superintendent on account of assets previously disallowed and charged off Provided the superintendent of banks shall 6. tion during such period from the sale of securities. and unpaid. have approved.

Such fund shall up to twenty per centum of the capital for the of the trust company be used only payment of losses in excess of undivided profits. by fund may be created or increased by transfers from undivided profits. All losses sustained by all it. and such other assets as shall have been disinterest shall allowed by the superintendent of banks. §203. its board The balance thus obtained shall constitute the net earnings of such trust company for such period. Dividends to Stockholders. and for What Purposes Used. contributions. earnings of a trust company have been determined at the close of a dividend period as provided in section two hundred two of this article. Of What Composed.M'. less than one-tenth. if its surplus fund does not equal twenty per centum of the trust company's capital. or from net earnings. In the it computation of such losses debts owing to shall be included have been paid for more upon which no than two years or on which a judgment has been recovered which shall have remained unsatisfied for two years. or the entire amount thereof centum. much thereof. or. or by of directors. Surplus Fund. Every trust company shall Such create a fund to be known as a surplus fund.W VllKK 4. one-tenth of such net earnings shall be credited to the surplus fund or so as will capital. such fund equals such twenty per be credited to the trust company's profit and loss account. if its expenses and losses for such may . equal twenty per centum of such fund make such The balance if of such net earnings. Credits to Surplus Fund and to Undivided When the net Profits. How Net Earnings Credited for Dividend Purposes. § 204.

state the reasons for such The application shall proposed change. such change may be made upon if the written approval of the superlimits.310 TRUST COMTANY LAW its dividend period exceed gross earnings. § 205. and shall be its signed and acknowledged by a majority of directors board of of stockholders owning at least two-thirds in its and accompanied by the written assent thereto amount of If the stock. No trust company shall of its pay any dividends to its stockholders have made good any existing impairment capital and any existing encroachment on its shall reserves required to be maintained against deposits. credit or until it profits. Change of Location. signed by the president and an- other principal officer of the trust company shall be published once a week for two successive weeks imme- *So in original. and shall be available for dividends. Any trust company may make a written application to the superintendent its of banks for leave to change place of business to another place in the same county. in which the principal place of business of the trust company is located. The credit balance of such account shall constitute the undivided profits at the close of such dividend period. proposed place of business if in is within the limits of the village. such excess shall be charged to its profit and loss account. . declare such dividends as they shall judge expedient from such undivided declare. but not more frequently. notice of intention to intendent. a city not divided into boroughs. The directors of any trust company may annually. semi-annually or quarterly. beyond such make such application. borough or city.

If the superintendent grant his certificate authorizing the change of location. Who May Enforce Liability. but the individual liability of such stockholders for the contracts. Within What Time Action Must Be Commenced. poration law. powers and duties of stockholders of trust companies shall be as prescribed in the general corporation law and the stock cor§206. and engagements of the trust company and the time within which an action may liability shall be governed exclusively by the provisions of this section and be instituted to enforce such section eighty of this chapter. upon or after the day specified in the certificate. and thereafter its principal place of business shall be the location so specified. The stockholders of every trust company shall be .NEW YORK diately preceding such application in a lished in the City of Albany. the trust company in shall cause such certificate to be pub- lished once in each newspaper published. and in a newspaper lished in the county in by the superintendent. in officers are 311 required by law to to be designated newspaper pubwhich notices by state be published. The rights. remove its property and effects to the location designated therein. the trust company may. and it shall have all the rights and its powers former in such new location which it possessed at location. Who Liable as Stockholders. Rights and Liabilities of Stockholders. debts. week two successive weeks in the which the notice of application was for When the requirements of this section shall have been fully complied with. pubwhich the place of business of such trust company shall is located. as provided in section fifty of this chapter.

. at the par value thereof. however. debts or engagements of the trust company. provided. in which case he shall be personally liable as a stockholder. caused his stock to be transferred on the books of the trust com- pany when such trust company is solvent to any resident of this state of full age previous to any default in the payment of any debt or liability of the trust company. The term "stockholder" as used in this section shall apply to Such persons as appear by the books of the trust company to be stockholders Every owner of stock. for all contracts. equally their stock therein. debts and engagements of the trust company. another person. and without any intent to evade his liability as a stockholder. in addition amount invested in such shares. shall be subject to any personal liability for any contracts. or to a person holding stock bona fide fiduciary capacity and not appearing by the books of the trust company to be the owner and in a holder thereof in his own right unless such fiduciary shall have invested the funds in his care in violation of law or of the terms under which said funds are held by him. that such term shall not apply to a person holding stock as collateral security for the payment of a debt and not appearing by the books of the trust company to be the owner and holder thereof in his own right. though the same may be on such books in the name of 1. An enforce such liability must be brought within to the action to six years after the cause of action has accrued. legal or equitable. : 312 TRUST COMPANY LAW and ratably and not one for another. al2.. No person who has in good faith. to the extent of the amount of individually responsible.

Whenever requisition the superintendent of banks shall have made upon any trust company pursuant to section fifty-six of this chapter to make good the amount of an impairment of its capital. all actions or proceedings to enforce the liability of stockholders under this section shall be taken and prosecuted only in the name of the superintendent or the receiver. or shall have failed or neglected such action or proceeding within sixty days after the receipt of such request. and in that event such action or proceeding may be taken by any creditor of the trust company. But no such action shall be brought by a creditor until a judgment shall have been recovered by made by any to commence him against the trust company and an execution thereon shall have been returned unsatisfied in whole or in part. If any stockholder shall refuse or neglect to pay the assessment specified in such notice within sixty days from the date thereof. unless the superintendent or receiver shall refuse to take such action or proceeding upon proper request in writing creditor. Impairment of Capital. defi- by a written or printed notice mailed to such stockholder at his place of residence. Sale of Stock. as the case may be. Assessment of Stockholder to Make Good § 207.NEW Yi iKK 313 In case the superintendent of banks shall have taken possession of the property and business of the trust c< >m pany pursuant to section fifty-seven of this chapter or a permanent receiver of such trust company shall have been appointed. the directors of the trust company shall im- mediately give notice of such requisition to each stockholder and of the amount of the assessment which he must pay for the purpose of making good such ciency. or served personally upon him. the directors of such trust company shall have the right to sell to the highest .

after giving previous notice of such sale for two weeks in a newspaper of general circulation published in the county where the principal office of such trust company is located.314 TRUST COMPANY LAW bidder at public auction the stock of such stockholder. however. but no event be sold for a smaller sum than the valuation put on it by the superintendent in his determination and certificate. and without such published notice. cancellation absolute an effect as herein provided. the said directors may accept such offer and sell such stock to the person or persons making such offer. or such stock may be sold at private sale. if any. and a copy thereof served upon the owner of record of the stock sought to be sold either personally or by mailing owner at his place of residence or the address furnished by him to the trust company and if. which valuation shall said stock shall in not be less than the amount of the assessment called for and the necessary costs of sale. Out of the avails of the stock sold the directors shall pay the necessary costs of sale and the amount of the assessment called for thereon. or to any other person or persons making a larger offer than the amount named in the offer submitted to such stockholder. shall A of the outstanding certificate or certificates evidencing the stock so sold. weeks from the time of service of such offer. The balance. after service of such offer. provided. shall be paid to the person or per- sale of stock sons whose stock has been thus sold. and shall render the same null and void and a to the new certificate or certificates shall be issued purchaser or purchasers of said stock. . that before making a private sale thereof an offer in writing to purchase such stock shall first be obtained. such owner shall still refuse or neglect to pay such assessment within two a copy of such offer to such .

the first board of directors shall classify themselves by lot into The term of office of the first class shall expire on the third Wednesday of January next following such classification. term of office of the second class shall expire one year thereafter. Within six months from the time when such trust company shall commence business. as shall from time to time be prescribed in its by-laws. Classification . The persons named or such of them in the organization certificate. § 209.M. shall constitute the board of directors. Annual Meeting of Stockholders. Ten- ure of Office of Original Directors. and annually thereafter. 315 Number of Directors . At or before the expiration of the term of the first class. respectively. a number of directors shall be elected by the stockholders equal to the number of di rectors whose term will then expire who shall hold their offices for three years.W YORK § 208. The affairs of every such trust company shall be managed and its corporate powers exercised by a board of directors of such number. and shall severally first continue in office until others are elected to fill their re- spective places. provided that all directors whose term of office shall expire as heretofore provided shall none the less continue in office until their successors are elected as hereinafter provided. or until their successors are elected. as shall become holders of at least ten shares of such stock. the stockholders may fill for the balance of the unexpired term any vacancy which has occurred in the office of any other director and which . not less than seven nor more than thirty. and at such election. Notice. The three classes as nearly equal as may be. and the term of office of the third class shall expire two years thereafter. and may add to their number not exceeding the limit of thirty.

316 TRUST COMPANY LAW filled vacancy has not been pany. and in such other manner as may be prescribed in the by-laws. of the . §211. shall be given by publication thereof at least once in each week for two successive weeks immediately preceding such election. company and his shall office and he shall not be eligible for re-election as a director for a period of one year from the date of director. so and honestly administer the affairs of the trust company. Each when appointed or elected. where such election is to be held. the next succeeding annual meeting. after such election. and that he own right. or willingly permit to be violated. tion of directors place of holding the stockholders' meeting for the elec- and for action upon such other matters as may be brought before such meeting. and every person elected to be a director who. Qualifications and Disqualifications of Di- Every director of a trust company shall be a stockholder of the trust company owning its in his own right at least ten shares of capital stock. any of the provisions of law applicable to such trust comis the owner in good faith and in his number of shares of stock required by this article. Oath of Directors. and will not knowingly violate. pledge or cease to be the owner in his own right of the cease to be a director of the trust shall be vacant. shall hypothecate. rectors. shall take an oath that he far as the duty devolves on him. approved by the superintendent of banks. amount of stock aforesaid. § 210. subscribed by him or standing in his name on the books of the trust company and that the same pany. diligently will. by the directors of the comNotice of the time and Such election shall be held at the principal place of business of the company. in a newspaper published in the county.

constitute a If the is number of directors necessary to quorum not prescribed in the certificate of incorporation or organization certificate. The directors of every trust company shall hold a regular meeting at least each month. together with the office shall The persons directors whose terms of not that year expire board until another election shall be Vacancies occurring in the intervals of elections shall be filled by the board of directors for the balance of the unexpired term. in case of re election or reap- pointment. Annual Meeting of Directors. Within fifteen days after the date on which is the annual meeting of stockholders shall. or in any way pledged as security for any loan or debt during Such oath shall be subscribed by the director making it. Quorum.NEW YORK is 317 not hypothecated. to the superintendent of banks. § 214. shall constitute the held according to law. hold a meeting at shall elect a president which they from their own num- ber. and immediately transmit ltd his previous term. or in the by- . Monthly Meetings of Directors. held its directors after their due qualification. Election of § 213. the directors whose terms of office do § 212. Officers. In case of failure to elect any director on the day named. that such stock was not hypothecated. and certified by an officer authorized by law to administer oaths. and. a vice-president. Failure to Elect. Vacancies Filled by Board. or in any way pledged as security for any loan or debt. number in the class whose term number as may have failed of so elected. and such other officers as are re- quired by the by-laws to be elected annually. When not that year expire may proceed to elect a number of directors equal to the that year expires or such re-election. once in Statement to Directors.

but such officer or officers may omit from such statement discounts. with the same effect as if such in the certificate of incorpora- number were prescribed shall tion or organization certificate.318 TRUST COMPANY LAW laws. loans or advances including overdrafts and renewals of less than one thousand dolSuch statement lars excepting as hereinafter provided. designate an officer or officers whose duty it shall be to prepare and submit to each director at each regular meeting of the board. describing the collateral to such indebtedness which such statement is submitted. loan or other advance. together with a list of the directors present at such meeting. the directors shall not be less in no case less may fix such number. discounts and advances including overdrafts to each individual partnership. including overdrafts and renewals made since the last regular meeting of the board. verified by the affidavit of the officer or officers charged with the duty of preparing and submitting such statement shall be filed with the records of the trust com- . unincorporated association. or to an executive committee of not less than five members of such board. A copy of such statement. and of every discount. cor- poration or person whose liability to the trust has been increased one thousand dollars company or more since the last regular meeting of the board. as of the date of meeting at shall also contain a list giving the aggregate of loans. which than one-third of all the directors and than five. The board of directors by resolution duly recorded in the minutes. and no provision is made therein for determining the same. a written statement of all the purchases and sales of securities. together with a description of the collateral to such indebtedness held by the trust company at the date of the meeting at which such statement is submitted.

papers and affairs of the trust company. and the value of the collateral se- curity. or other- wise. with the special view of ascertaining their safety and present value.NF. On or or before the sucto the require- day of the month of May November ceeding any examination made pursuant ments of the last section. § 216. alty for Failure to Make or File. and placed on fde in said trust company. shall be made to the board of directors of such trust company. It shall be the duty of the board of directors of every trust o >m pany during the months of March or April and during the months of September or October in each year to examine. and the loans and discounts its officers and particularly the loans or discounts made or directors. Assistants.W YORK 319 pany within one day after such meeting. or for directly or indirectly to the benefit of such officers or directors or for the benefit of other corporations of which such officers or directors are also officers or directors. and into such other matters as the superintendent of banks may reSuch directors shall have the power to employ quire. and a duplicate thereof filed in the office of the superintendent of banks. such assistance in making such examination as they may deem necessary. §215. a report in writing thereof. fifteenth Reports of Directors' Examinations Pen. and be pre sumptive evidence of the matters therein stated. if any. or to cause a committee of at least three of its members to examine fully the books. a statement of Such report shall particularly contain . sworn to by the directors making the same. or in which they have a beneficial interest as stockholders. creditors. Examinations by Directors Into Affairs of Trust Company May Employ . thereof. held in connection therewith.

or to cause to be made. and. may find neces- sary in order to determine the true condition of the trust company. after such examination. indirect. if not. together with such deductions from the assets. a statement of that fact. or otherwise. of every officer or director thereof and of every corporation which any such officer or director owns stock to the amount of an officer twenty-five per centum of the total outstanding stock. together with their reasons for so regarding them. Communications From Banking Department Must Be Submitted to Directors and Noted in § 217. the name and market value of the collateral.320 TRUST COMPANY LAW the assets and liabilities of the trust as company examined. full statement of such other matters as affect the sol- vency and soundness of the institution. contingent. of the names and amounts of such as they consider worthless or doubtful. and a value. which in their opinion are doubtful or worthless. if any. if it has any market and its actual Such report shall also contain a statement of overdrafts. It shall also is also contain a statement. shown by the books. or to such report of examination in the the time specified. contingent or otherwise as such directors or committee. of loans. of any trust If the directors company file shall fail to make. or of which any such officer or director or director. value as nearly as possible. giving in each case the amount of the loan. in detail. . It shall also contain a statement showing in detail every known liability to such trust company. in indirect. also a statement of loans made on collateral security which in their opinion are insufficiently secured. direct. and the addition of such liabilities. such trust com- manner and within pany dollars for every shall forfeit to the people of the state one hundred day such report shall be delayed. direct.

. and duly noted in the book containing the minutes of the meetings of such board. by the officer receiving it. trust 321 Each official communication directed by officer thereof. deposits. relating to the superintendent of banks or one of his deputies to a company or to any an examination or investigation conducted by the banking department or containing suggestions or recommendations as to the conduct of the business of the trust com pany. and shall also state the amount of deposits the payment of which.NKW VHKK Minutes. and that the usual business of the trust company has been transacted at the location required by this arEvery such report exclusive ticle and not elsewhere. shall be submitted. Penalty for Within ten days after service upon Failure to Make. §218. specie and cash items. and such verification shall state that the report best of the is true and correct in all respects to the knowledge and belief of the persons verify- ing it. every trust company shall make a written report it to the superintendent. of the notice provided for by section forty-two of this chapter. is preferred by law or otherwise over other deposits. Every such report shall be verified by the oaths of the president or vice-president and another principal officer of the trust company. which report shall be in the form and shall contain the matters prescribed by the superin- tendent and shall specifically state the items of capital. public securities and private securities.of such board. real estate and real estate securities. in case of insolvency. or which the superintendent may deem proper to include therein. to the board of directors at the next meeting. and such other items as may be necessary to inform the public as to the financial condition and solvency of the trust company. Reports to Superintendent.

If any such trust company shall fail to make any report required by this section on or before the day designated for the making thereof. Such report shall Every such trust be verified by the oath of the president or vice-president and another principal officer of the trust company. when it recovered. within thirty days after shall have been the trust filed with the superintendent. if there be one if not. shall be paid into the state treasury to reim- burse the state for the sums advanced by penses of the department. unless the time therefor shall have been extended by the superintendent as provided by section forty-nine of this chapter. within ten days after make a written report to the superintendent stating the amount of such dividend. such company shall forfeit to the people of the state the sum that of one hundred dollars for every day that such shall fail to report report shall be delayed or withheld. or shall trust fail to include therein any matter required by the superintendent. and such report shall. then in the newspaper published nearest where company such trust company is located. Every such from time as trust company shall also make such other special reports to the superintendent as he to time require. 322 TRUST COMPANY LAW it of the verification shall. manner as he may declaring a dividend. be verified in such prescribe. the amount of its net earnings in excess thereof and the amount carried to the surplus fund. and for every day any such omitted matter. shall company.. it for the ex- . The moneys forfeited by this section. in such may if form and at such date may be prescribed by him. be published by in one newspaper of the place where its principal place of business is located. required by him.

every trust company shall make a written report to the superintend ent of banks.NEW YORK Annual Report of Unclaimed Deposits. In the month of September in each § 219. year. and upon what amount of stock or other evidences of indebtedness of such trust company it was declared or accrued. which day of August preceding such report amounted to fifty dollars or over and had remained unclaimed by any person or persons authorized to receive the same for five years then next preceding. which report shall be verified as hereinabove provided. No deposits. the name whose favor and the time when any declared or any such inits such dividend terest may have been accrued. In case any such trust company number of shares or upon what shall at said date dividends or interest. its on the first amount and the name and last known place of residence or postoffice address of the person of each person in making it. dividends or interest shall be deemed unif it claimed within the meaning of this section appears from the books of the trust company or from other written evidence on file with the trust company that the person or persons authorized to receive them have knowledge thereof. . verified by the oaths of the president or vice-president and one other principal officer of the trust company. may have amount. have held no such unclaimed deposits. and on or before the tenth day thereof. Penalty for NonCompliance. Publication. which report shall contain a true and accurate statement of all deposits made with the trust company and all dividends declared and interest accrued up< >n any of its stock or other evidences of indebtedness. it shall at the time above specified make a written report to the superintendent so stating. Dividends and Interest. Such statement shall set forth the date of each such deposit.

and shall file with the superintendent of banks on or before the first day of October in each year proof by affidavit of such publication. the trust written acknowledgment before the filing of such report with the superintendent. a newspaper published at Albany in known and place of residence or postoffice address. a statement showing the is amount entitled requesting which such person written acknowledgment to company may reimburse itself for such expense by deducting the amount thereof from the sums due any such person or persons who shall not have made thereof. if there be a and at least once in which notices by state officers are required to be published. dividends or interest under the provisions of this section shall cause to be published once in each week for two successive weeks in a newspaper in the village or city in designated by the superintendent published in the county and is located. to each person authorized to receive any such unclaimed deposit. postage prepaid. at his last which such trust company newspaper published therein. in the proportion that each such sum bears to the aggregate thereof. unless the time therefor shall have been extended by the superintendent as provided by section forty-nine of this chapter.324 TRUST COMPANY LAW Every such trust company which reports any unclaimed deposits. the trust company shall have mailed. . but if. Any or to file such trust company failing to make any report this any affidavit of publication required by section shall forfeit to the people of the state the sum of one hundred dollars for each day such report or the filing of such affidavit of publication shall be so delayed or withheld. dividend or interest. on or before the first day of August in that year. The expense of such publication shall be paid by the trust company. a true copy of such report.

Every person violating the provisions of this subdivision shall. Directors and Employees. shall have levied any assessment upon any trust company and shall have duly notified such company of the amount thereof. forfeit to the people of the state twice the amount of the loan which he shall have made. and in no event shall any officer . ployee of any No officer. or other emin Restrictions on Officers. director. Every trust company shall pretrust serve all its records of final entry including cards used under the card system. or directly or indirectly. and no person any way interested or concerned in the management of its affairs. clerk trust company. Preservation of Books and Records of Trust Company. director. for each offense. shall as individuals discount. make any which he loan upon any note or other evidence of debt. and deposit tickets. from the trust company with which he is connected any sum of money without the written approval of a majority of the board of directors thereof trust tiled in the office of the company or embodied is in a resolution adopted by a majority of such board exclusive of the director to the loan whom of a made.NEW YokK § 220. clerk or other employee of any company shall borrow. Company for AssessWhen the superintendent. pursuant to the powers conferred on him by article two of this chapter. Liability of Trust ments by Superintendent. No trust officer. the amount so assessed shall become a liability of and shall be paid by such trust company to the superintendent. shall know to have been offered for discount to such trust company and to have been refused. §221. for a period of at least six years from the date of making the same or from the date of the § 222. last entry thereon. directly or indirectly.

director. any such or similar business. this provision shall. time this act takes effect may continue to exercise such powers. or have or exercise any of the powers specified seven and eight of section one hundred eighty-five of this article. directly or indirectly. securities or other personal to receive deposits of property from any person or corporation in trust. forfeit to the people of the state twice amount which he § 223. Every person knowingly violating the for each offense.326 TRUST COMPANY LAW trust company located in a city of the first class borrow any sum of money from such trust company. clerk or other employee. or transact. and any domestic corporation legally exercising any of the powers conferred by such subdivision at the in this state in subdivisions one. shall have borrowed. No corporation other than a trust of this state shall company organized under the laws have or exercise in this state the power money. provided trust companies of this state are permitted to act as such executor or trustee in the state where such for- . six. and a trust company incorporated in another state may be appointed and may accept appointment and may act as executor of. the last will and testament of any deceased person in this state. a loan to that corporation loan to such officer. or trustee under. four. shall be considered for the purpose of this subdivision as a director. clerk or other employee of any trust company shall own or control a majority of the stock of any other corporation. except that a federal reserve bank may exercise the powers conferred by subdivision one of such section if authorized so to do by the laws of the United States. If an officer. five. nor have or maintain an office in this state for the transaction of. Prohibition Against Encroachments Upon Powers of Trust Companies.

affecting or relating to the estate represented or held by such executor or trustee or the acts or defaults of such corporation in reference to such estate. such foreign corporation shall not thereafter be appointed or act as executor or trustee in this state. together with the postoffice address of No its principal office. with the same effect as if it existed in this state and had been lawfully served with process therein. and shall also have filed in the office of the superintendent a copy of its charter by its secretary under its corporate seal. any such foreign corporation violates this provision. its true and lawful attorney upon whom all process in any action or proceeding against such executor or trustee. .NEW YORK 327 eign corporation has his domicile. The validity of any mortgage heretofore given by a foreign corporation to a trust company doing business within the foreign domicile of such mortgagor to secure the payment of an issue of bonds shall not be affected by any of the provisions of this section and such mortgage shall be en forcible in accordance with the laws of this state against any property covered thereby within the state of New York. foreign executor of or trustee under the last will and testament of any deceased person. having authority to act as corporation. shall establish or maintain directly or indirectly any branch ofhee or agency in this state or shall in any way solicit directly or indirectly If any business as executor or trustee therein. and such foreign corporation shall have executed and tiled in the office of the superintendent of banks a written instrument appoint- ing such superintendent in his name of office.

Sections 20 and 23. 2. Y. Publication of notice of intention. Section 181. Sec- . of publication and of service of notice of intention. Sections 180-181. Designation of newspaper in which to publish 3.) PROCEDURE FOR THE ORGANIZATION OF A TRUST COMPANY Chapter 2 of the Consolidated Laws Execution by incorporators of notice of intention to organize and organization certificate in duplicate. In order to Superintendent in making the investigation required and to expedite same. 4. Section 20. tion 182. Albany. Submission of organization certificate in duplicate to Superintendent of Banks accompanied by proof 6. it is advisable at the of newsassist the hereafter to submit same time a statement with reference to the need for such an institution and two references (banking references preferred) for each incorporator. 5. notice of intention to organize. Filing of notice of intention to organize with Superintendent with request for designation paper in which to publish same. N. Service of notice of intention.Instructions and Forms for Organizing a Trust Company Under the Laws of New York (Issued by Superintendent of Banks. Section 181. 1.

office Section 180 of Tax Law. Payment Section 183. of organization tax and filing of duplicate receipts with Superintendent of Banks and County Clerk. — 329 NEW YORK FORMS 7. Section 24. refusal. we hereby specify and state as follows. Section 22. NOTICE OF INTENTION TO ORGANIZE The We.. Section 183. certificate Section 23. tention to organize a Trust Trust Company the undersigned. to wit: . 11. 12. Organization as corporation. tions 183 17. hereby give notice of our in- Company. 8. Deposit of bonds with Superintendent. Section 23. 15. under and pur- suant to the laws of the State of New York. Section 183 Examination by Superintendent as to paycapital ment of 13. in conformity with the statute in such case made and provided. and certified copy in office of Super- intendent of Banks. Authorization certificate to be issued by the Superintendent and filed and recorded in the office of the 18. Payment of capital. Filing of affidavit of payment of capital in County Clerk's 14. and 184. Filing oaths of directors with Superintendent. Section 24. and office report. 10. Filing of duplicate organization Section 183. Section 211. Superintendent and of the County Clerk. 16. Investigation by the Superintendent of Haul and approval or 9. of stockholders in the Sec- Filing of verified list of the Superintendent. and. Filing of duplicate organization certificates for examination.

In witness whereof signatures this we have hereunto . The name The of the proposed Trust Com- pany pany is Third. The amount of its capital stock is Dollars.330 TRUST COMPANY LAW First.) . affixed our day of 191 (Attach Copy of Notice Here. is location of the proposed Trust Com- to be Fourth. are The names of the proposed incorporators Second.

. and prepaying the proper postage on each of said notices so mailed. of 191 . to before me this day of . and resides at . tion to organize upon each State Bank and Trust Company hereinafter named by mailing to each of such State Banks and Trust Companies a true copy of said notice at the postoffice in the of inclosed in a sealed envelope and directed to each of such State Banks and Trust Companies at their postoince addresses. .NEW SfORK FORMS 331 PROOF OF SERVICE OF NOTICE OF ORGANIZE INTENTION T< I ( State of Count}' of New York. deposes and says that he is upwards oi twenty-one years of age. No in the . day of that on the notice of intenannexed the copy of a served he . t<> wit: Sworn 191.j being dulv sworn.. as follows.

transacted be is That the place where That the amount of its business is to be Third. That the name by which such Trust Com- pany is to be known is Second. its capital stock is to thousand dollars. do hereby certify First. That the names and places of residence Residences. of the incorporators are as follows Full names. all Trust Company.: : 332 TRUST COMPANY LAW ORGANIZATION CERTIFICATE OF The We. That the term of its existence shall be Sixth. being of of us being citizens of the full age United States and of us being residents of the State of New York. Fifth. the undersigned. That said incorporators each for himself does hereby declare that he will accept the responsibilities and faithfully discharge the duties of a director if . having associated ourselves together for the purpose of forming a Trust Company under and pur- suant to the Banking Law of the State of New York. and the number of shares into which such capital stock is to be divided is Fourth.

NEW YORK FORMS elected to act as such 333 when authorized by the provisions of the Banking Law of the State of New York.") J . day of in duplicate.. this State of County of New York. day of 19 On this .. Whereof. (Attach County Clerk's certificate authenticating signature of Notary Public who takes acknowledgements. Witness In signed and acknowledged this certificate ..) VERIFIED LIST OF STOCKHOLDERS OF State of County of New York.. personally appeared before me to me known to be the persons described in and who executed the foregoing certificate. and severally acknowledged that they executed the same.. We have made. 191.

Y. . N. the said deponents. being severally duly sworn. that they. is . is hereto and list marked "Schedule A" a true and correct of the stockholders of said with the residence. County of being severally duly sworn say. do. AFFIDAVIT OF PAYMENT OF CAPITAL STOCK State of New York. that said President of and said is of . Y. each for himself. Subscribed and severally sworn to before this me day of 191 . and each for himself says. depose and the say that the said ' is . are the principal officers of the said Company. President of the city of is located at and that said the Treasurer that annexed of the said Company .' a corporation lately organized at that the capital stock of said corporation is N. the sum of and is divided into .. 334 TRUST COMPANY LAW and . that deponent is a resident of the of County.. postoffice address and number of shares of stock held by each of them respectively.

and that the whole : amount of said capital stock. of the ing in his that the Laws name on of 1914. Chapter is said trust company required by Section 369. day of 191 .. NEW YOKK FORMS shares of 335 each. that said stock or in now stand the books of the said trust company same is not hypothecated as security for any loan or debt. being severally duly sworn. each for himself says that he is the owner in good faith and in his own right of the number of shares of the stock of 211. i County of ss J having been elected as directors of the Trust Company. diligently and hon- any way pledged . to wit the sum of has been in good faith subscribed and has been paid in. that such stock was not hypothecated or in any way pledged as security for any loan or debt during his previous term. and that he will. [ Seal of Notary] OATH OF DIRECTORS State of New York. in cash. so far as the duty devolves upon him. Subscribed and sworn to before this me .

336 TRUST COMPANY LAW estly administer the affairs of said corporation. Severally subscribed and sworn to by all deponents . .. this day of 191 [Seal of Notary | Date of annual meeting Total number of directors prescribed by your by- laws CLASS EXPIRING IN YEAR 1916 NAMES CLASS EXPIRING IN YEAR 1917 CLASS EXPIRING IN YEAR 1918 . before me. and will not knowingly violate or willingly permit to be violated any of the provisions of law applicable to such corporation.

" should be erased. except in cases of filling vacancies. . transmitting oaths of Directors chosen to fill vacancies. and in which When class they helong. "that such stock was not hypothecated or in any way pledged as security for any loan or debt during his previous term. In cases other than a re-election or reappointment the words in the oath. state whom such Directors succeed.NEW YORK FORMS 337 The oaths of Directors filed in 1915. should coincide with list of names given above as constituting the class of 1918. The classes number of Directors expiring in the three must equal the number of Directors prescribed total by your by-laws.

George of Andrews. heretofore its of the New York of Guaranty and Indemnity Company. and the court being satishas been fied that this application made in pursuance of a resolution of the Board of Directors of the said . and upon reading and filing the approval of the said petition by the Superintendent of Banks. In the Matter of the Application The New York Guaranty and Indemnity Company for leave to change its name. Supreme Court held at the City of New York on P. Justice. the the Present: Hon.Precedents Showing Amendments to Charter New York Trust Company IN of a CHANGE At a Special CORPORATE NAME of the Term County Court House in 3rd day of December. 1895. for leave to change its name and to assume the name of Guaranty Trust Company of New York. and by the Superintendent of Insurance. Upon reading the petition. and upon filing the affidavits of David S. filed. a corprincipal business office in the City poration having New York. Owen and Morris Van Vliet showing that notice of the application for this order has been published in the New York Law Journal a and in the New York Evening Post once prior to the said week for six successive weeks application.

in the office of the Secretary of State. it is Ordered. within ten days from the entry thereof. and of the Superintendent of Insurance respectively. And it is further this order he published within ten in Ordered. Increase in Number of Directors State of In New York. J. the County of New York. S. and the same hereby is -ranted. and that the said petition true. attorney for the petitioner. 1896. and upon filing a certified copy of this order.NEW YmKK i HARTER is Company. within ten days from the date hereof. Clerk. Purroy. Henry D. with the Clerk of the County of New York. George P. Enter Andrews. and that there is no reasonable objection to the granting thereof. Now on motion of Lawrence Godkin. (Seal) A copy. and that the New York Guaranty and Indemnity Company he authorized to assume the name of Guaranty Trust Company of New York. on and after the 2nd day of January. of the Superintendent of Banks. That days after the entry thereof once successive weeks in the each week for four a daily newspaper printed in New York Law Journal. upon filing a copy of this order and the papers upon which it is granted. . That the said petition be. Banking Department of di- the matter of the proposed increase of the number rectors of the Guaranty Trust Company. C.

TRUST COMPANY LAW John \Y. in the year of our Lord one thousand nine hundred and four. Superintendent of Banks. Wheelock. directed to each stockholder of record at his last known postoffice address. my hand and official seal of the Superin- tendent of Banks at the City of Albany. the undersigned. Witness. and Edgar C.340 I. Hebbard. to twenty-seven (27). the present number. W. Secretary. a domestic stock corporation formed under Chapter 179 of the Laws of 1864 of the State of New York and the several acts amendating thereof and supplemental thereto. President. Castles. and that proof of the due service of notice in writing of such meeting personally or by mail. the present number. Second Deputy Superin- New York. upon compliance with the provisions of Section 21 of the Stock Corporation Law. do hereby certify: That said Special Meeting was duly called in the manner provided by law and was held at the usual place of meeting of the Directors of said Trust Company. Deputy Second (Seal) Transcript of Proceedings of Special Meeting of the Guaranty Trust Company of New York. be increased from tendent of Banks of the State of twenty-one (21). this twentysixth day of November. John W. New York City. held to determine whether the number of directors of the said trust company shall be increased from twenty-one. John. respectively. We. . Do hereby consent that the number of directors of the Guaranty Trust Company. to twenty-seven. of a Special Meeting of stockholders of Guaranty Trust Company of New York. Wheelock.

on Wednesday. stockholders owning a majority of the in the Company 16. ." At the time and place al>< >ve specified there appeared in person and by proxy. the 14th day of December. such notice of special meeting directed to each stockholder of record at his last known postoffice address. 1904. 33 Lombard Street.Meeting.000 shares.W Yokk inc RE ^Si Of DIRJ I I' 341 was filed in the office of the corporation at or before the time of such meeting. to-wit: out of the total issue of 20. There was produced from on file in the office of the corporation and read at the meeting. 1904. November 30. the usual place of meeting of the Directors. verified by the President and Secretary of such Special . to-wit "'Minutes of the Special Meeting of stockholders of Guaranty Trust Company of New York. That the proceedings of such Special Meeting have been duly entered in the minutes of the corporation and that the following is a transcript thereof.: M'.770 shares of the stock of the corporation. by duly mailing on the 30th day of November. at 11 o'clock a. the reading of the minutes of the last meeting was dispensed with. m. and Edgar C. 1904. and organized by choosing from their number John W. New York City. Hebbard as Secretary of such Special Meeting. Castles as President. motion duly made and carried. held at the office Mutual Life Building. New York. said notice being as follows: Guaranty Trust Company of New York Mutual Life Building. in the Borough Cedar the corner of Nassau and of Manhattan. at streets. Corner Nassau and Cedar Streets London Office. due proof of service On of two weeks' notice in writing upon each stockholder of record.

to determine whether the shall be increased number of Directors of the said Trust Company from twenty-one. and the oath so taken was duly reduced to writing and severally subscribed by them. the present number. file There was also produced from on in the office of said corporation. to the increase of the number of Directors of this Trust Company from twenty-one. Secretary. m. to twenty-seven. in the Mutual Life Building.342 TRUST COMPANY LAW the Stockholders of the To Guaranty Trust Company of Stockholders of Guaranty New York: A Special Meeting of the Trust Company of of this New York will be held at the office Company. and before entering upon the discharge of their duties were severally sworn to faithfully execute the duties of inspectors at such meeting with strict impartiality and according to the best of their ability. the present number. Norman Henderson. New York City. upon compliance with the provisions of Section 21 of the Stock Corporation Law. and James Simpson were duly nominated to be inspectors of election to act at the Special Meeting and upon a vote being had were duly elected such inspectors of election. at the corner of Nassau and Cedar Streets. 1904. C. the 14th day of December. Dixon. Hebbard. the usual place of meeting of the Directors.. William P. in the Borough of Manhattan. E. Upon motion duly made a vote was then taken of . at eleven o'clock a. to twenty-seven. the Consent in writing of the Superintendent of Banks. and read at said meeting. given under his official seal. on Wednesday.

E. the present number. was adjourned. increased from twenty-one. that being the county which this Special Meeting had been held. and that the Board of Directors and Officers of the Company take all necessary steps to carry into effect this resolution. in John W. 1907. being a majority of the stock of the corporation. In witness whereof. and the same is. C. on motion duly-made and carried. its The said Inspectors of Election then certified that a sufficient number of votes had been given in favor of the adoption of said resolution and accordingly as the result of such vote the President of the meeting declared the same adopted. signed. and the said certificate together with the oath so taken and subscribed by them as aforesaid was directed to be filed immediately in the office of the Clerk of New York County. That the number of Directors of the Guaranty Trust Company of New York.NEW YORK INCREASE OF DIRECTORS 343 the stockholders present in person and by proxy on the following resolution: Resolved. There being no further business the meeting. The said Inspectors of Election thereupon made and executed their certificate in writing of the result of said vote taken at this Special Meeting to increase the number of directors from twenty-one. we have made. this 2nd day of August. President. . to twenty-seven.770 shares of stock. Secretary. and verified this certificate. to twenty-seven. voted in favor of such resolution and no stockholder voted against adoption. Hebbard. Castles. be. the present number. Stockholders owning 16.

Sworn George (Seal) to before me this 2nd day of August. the 14th day of December. Charles H. Castles. C. Kings County. Hebbard.344 TRUST COMPANY LAW State of New York. Fort. P. Castles. Keep. E. meeting of stockholders of Guaranty Trust Company of New York. 1904. New York City. I. 1908. Commission expires 30. and that the same is true and that the tranat the office of this : script of the proceedings of such special meeting is a true transcript thereof as entered on the minutes of the corporation. Banking Department di- In the matter of the proposed reduction in the rectors number of of the Guaranty Trust Company of New York. Hebbard. do hereby consent that the . 1907. J John W. on Wednesday. 1 r County of New York. Superintendent of Banks of the State of New York. being severally duly sworn. John W. Certificate filed in New York March County. depose and say and each for himself deposes and saith that he has read the foregoing certificate subscribed by him and knows its contents. corner of Nassau and Cedar Streets. President. held company in the Mutual Life Building. respectively. and Edgar Secretary. Notary Public. the usual place of meeting of the Directors. of a special SS C. Reduction in Number of Directors State of New York. Borough of Manhattan.

the usual place of meeting of the Directors. m. At the time and place specified there appeared in person or by proxy. and that the following is a transcript thereof. Ki. No. New York City. 28 Nassau Street. C. Castles as President of the meeting and E. do hereby certify that the proceedings of such meeting have been entered in the minutes of the corporation. and E. John W. June 27. duly called and held at the office of the Company. the present number.656 shares out of the stock of the Company.i.r. my hand and official seal at the City of Albany.000 shares. Hebbard as Secretary of the meeting. of a Special Meeting of the stockholders of Guaranty Trust Company of New York. New York City. 1 1. Secretary. 28 Nassau Street. Witness. being the usual place of meeting of the directors. President. No. to-wit: Minutes of a Special Meeting of the Stockholders of Guaranty Trust Company of New York. the undersigned. Castles. to twenty-one (21). The meeting was organized by stockholders of John the election from the W. < I C. The notice of the meeting. to-wit : a total issue of 20. stockholders owning a majority of 15. (Seal) Superintendent of Hanks. Hebbard. We.NEW YORK REDUCTION OF DIRECTORS 345 number of of directors of the Guaranty Trust Company I New York be reduced from twenty-seven 27). at 11 a. on Thursday. respectively. C. Held at the Office of the Company. upon compliance with the provisions of Section 21 of the Stock Corporation I -aw. together with an affidavit . this seventh day of June in the year of >ur a >rd one thousand nine hundred and seven. 1907.

Hammell. 103. E. Certificate filed in Kings County. New York Commission expires March 30. Deponent personally examined on said 12th day of June. William (Seal) Hammlee. to-wit. the stock book of said Guaranty Trust Company of New York and knows that the several persons to whom he mailed such notices were on said day the owners of record of all of the capital stock of said Guaranty Trust Company of New York. ( County of New York. That on the 12th day of June. Sworn to before me this James D. he mailed the notice of which a copy is hereto annexed to each stockholder of record of Guaranty Trust Company of New York by depositing a copy of said notice in the post-office in the Borough of Manhattan. 17th day of June. 1908. Hurd. directed to each stockholder at his last known postoffice address. 1907. William E. City of New York and enclosed in a postpaid sealed envelope directed to each said stockholder at his last known post-office address. : being duly sworn deposes and says That he is over twenty-one years of age and is in the employ of Guaranty Trust Company of New York. County. and affidavit were ordered spread upon the minutes of the meeting and are as follows State of New York. 1907. 1907. was produced from on Said notice file in the office of the corporation and read.: 346 TRUST COMPANY LAW of due service thereof on each stockholder of record. Notary Public No. two weeks before the meeting. on the 12th day of June. 1907. Guaranty Trust Company of New York. 28 Nassau Street. by mail. .

on Thursday. On motion duly seconded. E. and that the Board of Directors and Officers of the Company take all necessary steps to carry into effect this resolution. 28 Nassau Street. a vote was taken upon the following resolutions: Resolved. That the number of Directors of the Guaranty Trust Company of New York he and the same hereby is decreased from twenty-seven (27) to twentyone (21). E.. and were severally sworn to faithfully execute the duties of Inspectors with strict impartiality and according to the best of their ability. in the Manhattan. New York City. m. Secretary. 1907. On motion duly seconded. Norman Henderson and James Timpson were thereupon elected Inspector to act cat this meeting. Lombard York. Dixon. 347 London Office. of the Superintendent of Banks to the decrease of the number of directors of the Company from twenty-seven (27) to twenty-one (21) was pro- The consent duced and read. the 27th day Company. to determine whether the number of Directors of the said Trust Company shall he decreased from twenty-seven (27) to twenty-one (21). To the Stockholders of the Guaranty Trust Company of New York: A Special Meeting of the Stockholders of the New Guaranty Trust Company of New York at will be held the office of the Borough of of meeting of the Directors. C.NEW YokK R] mi HON 33 OF DIRECTORS Street. June 12. C. 1907. and the oath so taken was subscribed by them. Hebbard. the usual place of June. V. Wm. . at 11 o'clock a.

State of John New W. President. was the Secretary of a Special Meeting of the Castles and E. / County of New York. C. The said Inspectors of Election declared the result of said vote accordingly. John W. John W. Hebbard. this 27th day of June. York. Hebbard. in which County this meeting was held. : stockholders of the Guaranty Trust Company of New York. fied and filed this certificate. ( Hebbard being severally That he. being a majority of stock of the company. we have made. voted in favor of such resolution and no stockholder voted against its adoption. 28 Nassau Street. Secretary. C. E. veri- In Witness Whereof.348 TRUST COMPANY LAW Thereupon stockholders owing 15. in the city of New York. and he. held at the office of the Company. E. C. the usual place of meet- . C. duly sworn. The said Inspectors of Election thereupon made and executed a certificate in writing as the result of said vote taken at this meeting.656 shares of stock. was directed to be filed immediately in the office of the Clerk of the County of New York. and said resolution was declared duly adopted. Castles. Secretary. the said John W. No. President. the said E. the meeting adjourned. Castles. signed. and said certificate together with the oath taken and executed by them as aforesaid. depose and say Castles was the President. 1907. Hebbard. and upon motion duly made and seconded.

Notary Public No. November 8.000 Guaranty Trust Company of New Yory. of a special meeting of the stockholders of Guaranty Trust Company of New York. respectively. That the proceedings of such meeting have been entered in the minutes of the corporation. is The following a true copy of such notice: Guaranty Trust Company of New Yory. do hereby certify as follows: Prior to such meeting a notice. New 140 Broadway. signed by the President and the Secretary. 11 :00 m. New York March Commission expires Certificate of Increase of Capital Stock of $20. place and object thereof. a. 1915. this 27th day of June. Hebbard.000. John W. Hebbard. C. on Thursday.NEW YORK INCREASE OF CAPITAL at . 30. Secretary. a domestic stock corporation. Chairman. County. and that the foregoing. Castles. 103. 349 ing of the Directors. E.transcript thereof is true. . Charles H. 1907. Hurd. and the amount of the increase proposed. was published once a week for at least two successive weeks in The New York Times and The Evening Post. Certificate filed in Kings County. Sworn to before me (Seal) James D. Sabin. each being a newspaper published in the County of New Y< >rk. stating the time. the county where the principal business office of such corporation is located. C. June 27th. 1908. The undersigned. and E. York. held for the purpose of voting upon a proposed increase of its capital stock.

a vote was then taken of those present person or by proxy upon the following resolutions Resolved. That the capital stock of Guaranty Trust of Company New York be increased from the present . No. Sabin. as Chairman and E. at least two weeks before the meeting. in Upon motion. November 24. and to determine the disposition of such increase.000 to $20. By order of the Board of Directors.000. is The in- object of the meeting to vote upon the proposed crease of the capital stock of the Guaranty Trust Com- pany of New York by $10. 140 Broadway. Borough of Manhattan. in person or by proxy. Charles H. E. Hebbard as Secretary thereof.000.000. in numbers representing at least a majority of all the shares of stock of such corporation and organized by choosing from their number the undersigned. A copy of such notice was last also duly mailed. The notice of the meeting and proof of the proper publishing and mailing thereof were presented. on Wednes- A special day. 1915. postage prepaid. C. C.000. City of New York. Hebbard.: 350 TRUST COMPANY LAW the Stockholders of To Guaranty Trust Company of Nezv York: meeting of the stockholders of Guaranty Trust Company of New York has been called and will be held at the office of the corporation. to each stockholder of such corporation. namely: from $10. Sabin. stock- holders appeared. President. at twelve o'clock noon.000. the time and place specified in such notice. Secretary. at his known At post-office address. Charles H.

to consist of 200. such resolutions were declared The amount thereof is of the capital stock of the corporation is heretofore authorized stock as increased $ and the amount of the capital is $20. and the whole actually issued.000.been heretofore authorized and actually issued.000. and a triplicate thereof in the office of the Superintendent of Banks. voted in favor of such resolutions. That the Chairman and the Secretary of this meeting be and hereby are authorized and directed to make.002 shares of stock. The assets of the corporation are at least equal to . and to do all other acts and things which may be necessary to comply with the provisions of law applicable to and regulating such increase of capital stock. as required by Statute. each of the par value of $100. proceedings of this meeting to be entered in the minutes of the corporation. being at least a majority of all the stock of the corporation. and stockholders owning no shares voted against their adoption.000. and to cause the. to the amount of $20.NEW YORK [NCREASE OF CAPITAL 351 amount thereof.000. a duplicate thereof in the office of the Secretary of State. consisting of 100. A sufficient number of votes having been duly adopted. Resolved. and to submit the same to the Superintendent of Banks for his endorsement thereon of his approval of triplicate of the such increase of capital stock. to-wit. Stockholders owning 87. each of the par value of $100. and thereupon to cause such certificate to be filed in the office of the Clerk of the County of New York. verify and acknowledge a certificate in proceedings of this meeting. sign.000 shares.000 shares. $10. all thereof having. cast in favor of such increase.

New York. H. Charles H. 1915. Sworn 1915. Certificate filed in New York County No.352 its TRUST COMPANY LAW debts and liabilities and the capital stock as increased. respectively of the aforesaid meeting. and knows its contents. State of ss. Hebbard. Hebbard. C. Notary Public. 35. C. Sabin. Chairman and E. Secretary. Charles H. Chairman. being severally duly sworn. C. Wm. do depose and say. Bronx County No. County of New York. Hebbard. Sabin and E. Hebbard. to before me this 24th day of November. C. E. 1915. Secretary. Charles H. have made. signed. In Witness Whereof. Sabin. State of ss. Dated this 24th day of November. Secretary. Sabin. County of New York. 45. subscribed by him. each to me known and known to me to be the persons On this described in and who executed the foregoing certificate. before me personally came Charles H. . New York. Chairman. 24th day of November. E. and each for himself does depose and say. We verified and acknowledged this certificate in triplicate. Bnider. that he has read the foregoing certificate. and that the same is true.

in the manner following. . Notary Public.( I 000. Endorsement. \V. Certificate filed in New York County No. hereby approve the increase of the capital stock of Guaranty Trust Company of New York from $10. 1 me that they 1. is to say. That the undersigned have as- sociated. by the following.000. each of the par value of $100.000. Trust Company Charters Articles ok Association of ink Mississippi Valley Be It Trust Company.: OUR] < BARTER to 353 and they severally duly acknowledged executed the same. 1915." for the purpose of forming a corporation such as in and by the provisions of said Article XI authorized that . (Seal) City of Superintendent of Banks of the State of New York. Bronx County No. and do hereby associate themselves. under and in virtue of Article XI of Chapter 42 of the Revised Statutes of tin State of Missouri.\i. Witness my hand and official seal at the New York this 24th day of November. 35.) State of New York.000 shares. 45. ( Notary Public. Bnider.000 shares. to-wit The corporate name of the proposed corporation shall be Mississippi Valley Trust Company. upon the terms and I. each of the par value of $100 to $20. New York City. 1889. Remembered. concerning "Trust Companies. consisting of 100. Eugene Lamb Richards. Banking Department.000. as set forth in the within certificate. to consist of 200.articles of agreement.

Geo. Louis. . . E.Five hundred ..St.St.St.St Louis.Five hundred . W.Ten shares . G.Two hundred and fifty . Paramore. The amount of the authorized capital stock of the said corporation shall be ($2.Five hundred . .Two hundred . Pendleton. Louis.: 354 TRUST COMPANY LAW II. Walsh. .000) Five Thousand shares thereof. B. The said corporation shall be located in the city of St. St. Goddard. III.St. S.One hundred . to be divided into (20.One hundred and fifteen . Louis. St. . David W. .Two hundred . McNair. S. Thos. Turner. and it is hereby certified that the amount of the capital stock of said corporation actually subscribed in good faith at the time of the filing of these articles is (5. Louis. . Joel Wood James Campbell. Louis. State of Missouri. Chas. Julius S. Charles Clark. Caruth. IV. ther certified that one-half of the capital stock so subscribed has been actually paid up in lawful money of the United States and after is in the custody of the persons herein- named as the first board of directors of said cor- poration. Nelson Residences. Louis.One hundred .Five hundred . Bailey. Louis. St. .St. Louis.000) lion Dollars. Louis. . John Scullin A.Two hundred and fifty .St. Cobb Williamson Bacon. Louis.St. .St. H.One hundred . Louis. W. C. . Louis. L.St. F. Louis. . L.Two hundred and fifty . St. H. The names and places of residence of the several shareholders in said corporation subscribed and the number of shares of stock by each are as follows Shares Subscribed .000) Two Mil- Twenty Thou- sand shares of the par value of ($100) One Hundred Dollars per share. at the par value aforesaid for each of said shares and it is fur. Louis.One hundred X amcs. Hoffman. Louis.000. St. Louis. . T.St.Two hundred and fifty . .

Francis. and hold any real or personal . have been agreed upon V. Williamson Bacon. Thos. Hoffman. hundred hundred hundred hundred hundred and fifty twenty-five and and fifty fifty Board of Directors of said corporation shall be (21) Twenty-one. T. and to accumu- same such rates of interest as may be obtained or agreed upon. . Caruth. Ewing. . . transfer. and S.St. . Louis. M.Two B. . L. L. Nelson.MISSOURI CHARTER 355 T. David W. W. W. arc the following: First. Julius S. Goddard. R. B. VI. as authorized by said Article XI of said Chapter 42. Thomas O'Reilly. . Walsh. Turner. Francis. R. John I). Perry. George H. Bailey.One Aug. .St. Louis. )!r Nair. or may be committed or transferred to them by order of any of the courts of record of this state. The said corporation shall continue for fifty years from the date hereof. C. . Second. of said Revised Statutes of Missouri. F. S. G. F. . J>. H.Two John D. To take and accept by grant. To accept and execute all such trusts and perform such duties of every description as may be com mitted to them by any person or persons whatsoever. Louis. Third.Two S. and the following persons. B. first year.St. assignment. Louis.Two . John Scullin. VII. James Campbell. D. or of the United Stair-. Perry. Chas. Joel Wood. or any corporations. F. E. . subscribers to said stock. S. or other state. . Paramore. . Pendleton. Louis. .St.St. Aug. Cobb. is The purposes for which the said corporation formed. B. O'Reilly. or to allow such interest thereon as may be agreed not exceeding in cither case the legal rate. The number of the as constituting. A. devise or bequest.said'Board of Directors for the to-wit: Charles Clark. Ewing. late the To at receive moneys in trust. Hammett. Hammett.

or other states. transferring or countersigning the certificates of stock bonds or other evidence of debt of any corporation association municipality. on such terms as may be To Fifth. agreed upon. in this state. To act as agent for the investment of money for other persons. and as agent for persons and registering. or of the law or equity state. payable at a future date.356 TRUST COMPANY LAW estate or trusts created in accordance with the laws of United States. any of the courts of or of the United States. and generally to have and exercise such powers as are usually had and exercised by trust companies. To loan money upon lateral security. or to execute or guarantee any bond or bonds required by law to be given in any proceeding in this state. and execute such legal trusts in regard to the same. or insane person. established. under the appointment of any court of record having jurisdiction of the person or estate of such infant or insane person. of their duty of persons holding places of to certify public or private trust. or agreed upon in regard thereto. Seventh. on such terms as may be declared. corporations for the purpose of issuing. state or public authority. and guarantee real estate its title Eighth. accept from. To guarantee and the fidelity and diligent performance to real estate. in respect to their separate property. married women. whether real or personal. and execute trusts for. and act as agents for them in the management of such property. and to pledge mort- gages on therefor. or other Fourth. real and other securities as security . and execute and issue estate and colnotes and deits bentures. To act as guardian or curator of any infant Sixth.

1894. Turner. James Campbell. to me known to be one of the persons described in. B. David W. C. their associates. George H.MISSOURI i MAIM IK all 357 Ninth. O'Reilly. A. M. E. Hoffman. To buy and sell kinds of government. Louis. R. and kinds of negotiinvest- able and non negotiable paper. Louis. D. B. and their and successors have signed and acknowledged these articles of agreement at the said ( "ity of St. F. Louis. F. this in the twenty-ninth day of September year of our Lord. That on the 20th day of Sep- tember. G. Joel Wood. Pendleton. person- appeared Charles Clark. W. duly commissioned and qualified for a term expiring on the 12th day of May. Julius S. Be It Remembered. state. notary and for the aforesaid city and state. Thomas B. Nelson..\ Witness Whereof. public within 1890. Thomas John T. State of Missouri. Caruth. Scullin. undersigned. Bailey. L. subscrib- ers to said capital stock. also subscribers to the same. and who executed the foregoing instrument and acknowledged that he executed the same ally as his free act and deed. ss. Cobb. City of St. Missouri. I. on behalf of themselves. McNair. Williamson Bacon. . H. S. L. Chas. John D. Paramore. Hammett. D. Francis. the undersigned. A. Ewing. stocks and other ment securities. S. W. Goddard. all municipal and other bonds. before the. One Thousand Eight Hundred and Ninety: Charles Clark.Perry. Aug. in said city of St. S. Walsh.

personally appeared James Campbell. at said City of St. executed the foregoing instrument and acknowledged that he executed same as his free act And I further certify and deed. and severally acknowledged that they executed same as their free act and deed. that on the 27th day of Sep- tember. D. D. D. and who executed the foregoing instrument. Louis. M. W. David W. John Scullin and A. also to me known to be the persons who by same names last mentioned are described in. are described and who executed the foregoing instrument. that they executed the same as their free act and deed. Louis. S. before me as said Notary Public. personally appeared Thos. Nelson. 1890. D. Thomas T. Cobb. Louis. 1890. Bailey. Louis. before me I And as said Notary Public. Ewing. 1890. F. and severally acknowledged. at said city of St. And I further certify that on the 26th day of Sep- tember. also to me known to be the persons in. A. severally acknowledged that they executed the their free act . also to me known to be the person who by same name last mentioned is described in. L. personally appeared Julius S. who by same names last mentioned. at said City of St. C. G. McNair. B. personally appeared B. A. D. and same as and deed. at said City of St. Joel Wood. and Aug. 1890. Williamson Bacon. C. L. before me as said Notary Public.358 TRUST COMPANY LAW further certify that on the 24th day of September. E. H. A. And I further certify that on the 25th day of September.. before me as said Notary Public. Hoffman. B. Walsh. Pendelton. also to me known to be the persons who by same names last mentioned are described in and who executed the foregoing instrument. A. Turner. and who ( Vkeilly. Hammett. Caruth. S.

. Louis. Louis. also to me known to be the persons who by same names last mentioned are described in. Terry. I have hereto set my hand and affixed my notarial seal this 29th day of September. 1890. and acknowledged that they executed the same as their free act and deed. and State of Missouri. in said City of St. as such Notary Public at my office in the City of St. D. That on this 20th day of Sep- Notary Public within and for the aforesaid city and state. and severally acknowledged that they executed same as their free act and deed.MISSOURI CHARTER 359 And T further certify thai on the 29th day of SepSt. (Copy of Seal) Charles C. personally appeared S. W. A. personally ap- peared F. Francis and John D. Louis. I have hereunto set my hand and official seal. St. Dow. at said City of before me as said Notary Public. and who executed the foregoing instrument. Louis. In Testimony Whereof. this 29th day of September. 1893. In Witness Whereof. State of Missouri. City of Mo. ss. A. a of June. and who executed the foregoing instrument. Goddard to me known to be the persons described in. Be tember. Harvey L. 1890. Christie. D. and George H. before undersigned. It Remembered. Louis. Notary Public. Charles C. Louis Notary Public within and for the City of and State of Missouri. tember. duly commissioned and qualified for a term expiring on the 26th day 1890. Dow. St. R. Paramore. City of St. 1890.

Secretary of State. as the same remains of record in my office in Book Corps. page 89. City of St. Certificate of Incorporation of a New Jersey Trust Company to Certify. A. at 1:20 p. (Seal) Filed and certificate of Incorporation issued October 3. Recorder of Deeds for said city do hereby certify the foregoing to be a true copy of the articles of incorporation of the Mississippi Valley Trust Company. Missiouri.360 TRUST COMPANY LAW Notary Public. A. Louis. Lesueur. City of St. Commission expires June 26. Filed and recorded October 1. the undersigned. 9. under and by virtue of the provisions of an act of the legislature This Is . I. 1890. together with the acknowledg- and state. A. ss. 1890. 1893. D. 1890. Wm. and date of filing and recording thereof. Recorder. I have hereunto set my hand and official seal this first day of October. Louis. ment. do hereby associate ourselves into a trust company. A. the undersigned. Hobbs. Hobbs. m. Louis. In Witness Whereof. That we. Wm. Notary Public. Recorder. A. (Copy of Seal) Harvey L. City of St. Christie. State of Missouri.

The name of the trust company hereby formed is Commercial Trust Company of New Jersey. bonds or other evidences of indebtedness. 55 Montgomery Street. "An spective names in our rearticle "Fifth" of this certificate. and to act as agent of any corporation. together with and powers that are now or may hereafter be granted to or exercisable by trust companies by or under the laws of this state and To act as the fiscal or transfer agent of any (1) state. in the County of Hudson. Young. Third. foreign or domestic. upon whom process against said corporation may be served. and company set opposite we do further certify First. privileges and powers granted to trust companies by said act of the Legislature of the State of all New Jersey. The place where its business is to be carried on is the city of Jersey City. for any purpose now or hereafter required by statute or otherwise. register and countersign (2) certifi- cates of stock. and the location of the office of said Company in this State is No. is James C. in this State. having and exercising all the rights. 1899. municipality. NEW of the State of JERSEY CHARTER 361 Act Concerning Trust Companies (Revision of 1899)." approved March 24. . Second. body politic or corporation and in rights.: . privileges . and the name of the agent therein and in charge thereof. and we do hereby severally subscribe for and agree to take and pay for the number of shares of the capital stock of such trust New Jersey. entitled. The purposes and objects of said corpora- tion are to carry on and conduct the business of a Trust Company. such capacity to receive and disburse money To transfer. in the city of Jersey City aforesaid.

or which it shall acquire in satisfaction or partial satisfaction of debts due the corporation under sales. hold. women. of. married and to be their agent in the management of such prop(6) erty. or to transact To act. body politic or corporation. (9) trusts and execute any and all such and powers of whatever nature or description as To take. duties any business in relation thereto. accept and execute any and all such (8) legal trusts. as guardian. or in settlement or partial settlement of debts due the corporation business. judgments or mortgages. and as depository of any moneys paid into court.. (7) Court of Record. corporation or party To take. municipal or may other authority. 5 ) To To accept trusts from and execute trusts for in respect to their separate property. . corporation. purchase. receiver or trustee of the estate of any minor. accept . . whether for the benefit of any such minor or other person. under the order or appointment of any and powers in regard to the holding. securities and other personal property from any person or corporation. management and sonal. or by any person. and to loan money on real or personal securities To lease. as disposition of any estate. or the sale there- and the rents and be granted or confided to it by any Court of Record. and convey any and (4) all real property necessary for or convenient in the transits action of which the purposes of the corporation may require. real or perprofits thereof. 362 TRUST COMPANY LAW (3) To receive deposits of trust moneys. and to accept and execute any other municipal or corporate trust not inconsistent with the laws of this State. or by any of ( its debtors act as trustee under any mortgage or bond issued by any municipality.

and to be appointed and to act as the committee of the estates of lunatics. the bonds or obligations of the company may be given therefor. bills of exchange. To purchase. of any Court of Record. idiots. or administrator. To exercise the powers conferred on and to (14) carry on the business of a safe deposit company. to insure the fidelity ^>( of persons holding offices or places trust >n~ responsi- . and to receive and take and hold any property 01 estate. or which may be intrusted or committed or transferred to it or vested in it by order vise. corporation or other authority. by grant. persons of unsound mind and habitual drunkards. assignment. To be appointed and to accept the appoint(11) ment of assignee or trustee. or for investment. which may be the subject of any such trust. ( 10) promissory notes. to examine and guarantee title to land. invest in and sell stocks. under any assignment for the benefit of creditors of any debtor. debequest ^r otherwise. To act under the order or appointment of the (12) Court of Chancery or otherwise as receiver or trustee of the estate of property of any person. or any body politic. or any surrogate. made pursuant to any statute or otherwise. with or without the will annexed. firm. real or personal. bonds and mortgages and other securities: and when moneys or securities for moneys are borrowed or received on deposit.. association or corporation To be appointed and to accept the appoint(13) ment of executor of or trustee under any last will and testament. NEW JERSEY CHARTER 363 may be conferred upon or intrusted or committed to it by any person or persons. of the estate of any deceased person. transfer.







sole surety in

any case where by law

two or more

sureties are required:

collect coupons on, or interest upon all (15) manner of securities when authorized so to do by the


parties depositing the

same; To receive and manage any sinking fund of (16) any corporation, upon such terms as may be agreed upon between said corporation and those dealing with it;
Generally to execute trusts of every descrip(17) tion not inconsistent with the laws of this State or of
the United States;

To receive money on deposit to be subject (18) to check or to be repaid in such manner and on such terms, and with or without interest as may be agreed

upon by the depositor and the said trust company. Fourth. The amount of capital stock of said corporation
is Five Hundred Thousand Dollars, divided into Five Thousand shares of the par value of one hundred

dollars each.


The names and residences of the incorporaand the number of shares subscribed by each of

them, are as follows The period of the duration of this company Sixth.
shall be unlimited.

In Witness Whereof, We have hereunto set our hands and seals this first day of July, A. D. eighteen hundred and ninety-nine. Signed, sealed and delivered in the presence of

New York, County of New York,
State of



Remembered, That on

this twentieth

day of

July, A. D. eighteen

hundred and ninety-nine, personally

appeared, before me,



Master in Chancery of the State arscallen, who of New Jersey, Luther Kountze, J. D. in and who named persons the am satisfied are two of executed the foregoing certificate, and I, having first

made known

them the contents thereof, they did severally acknowledge that they signed, sealed and delivered the same as their voluntary act and deed, for the uses and

purposes therein expressed.

Edmund W. Wakelkk. Master in Chancery, New Jersey.
State of



County of Essex,


Remembered, That on


23rd day of Aug-

A. D. eighteen hundred and ninety-nine, personally appeared, before me, a Notary Public and Commissioner of Deeds, J. William Clark, who I am satisfied is one of
the persons

and who executed the foregoing certificate, and I having first made known to him the contents thereof, he did acknowledge that he signed, sealed and delivered the same as his voluntary act and deed, for the uses and purposes therein expressed. (Official Seal and other acknowledgments) W. A. Clark, Notary Public and Commissioner of Deeds.






State of



Department of Banking and

Trenton, December 5, 1899. I hereby approve the form of the foregoing Certificate of Incorporation of the Commercial Trust Company of New Jersey, and it appearing to me that the establishment of such Trust Company will be of public serv-

ice, I




hereby annex thereto


approval thereof, pur-

suant to Section 3 of "An Act Concerning Trust Companies" (Revision of 1899), approved March 24, 1899.

William Bettle,
Commissioner of Banking and Insurance.







William Bettle, Commissioner of Banking and Insurance. Received in the Hudson County, N. J., Clerk's Office, December 6, A. D. 1899, and Recorded in Clerk's
Record No.
. .

on Page




G. Fisher,

Certificate of Incorporation of a Pennsylvania



Governor of the Commonwealth of Pennsylvania: Sir: In compliance with the requirements of an

Act of the General Assembly of the Commonwealth of
Pennsylvania, entitled


act to provide for the incor-

poration and regulation of certain corporations," approved the 29th day of April, A. D. 1874, and the several

supplements thereto, the undersigned, three or more, of whom are citizens of Pennsylvania, having associated
themselves together for the purpose hereinafter specified, and desiring that they may be incorporated, and that letters patent may issue to them and their successors ac-

cording to law, do hereby certify The name of the proposed corporation 1st.



Commercial Trust Company.

Said corporation


formed for the purpose of

the insurance of owners of real estate, mortgages and

: :



others interested in real estate from loss by reason oi defective titles, liens and encumbrances and for conduct-

and carrying on all and every kind of business authorized by said Act of Assembly, approved the 29th day of April, A. D. 1874, and the various supplements

thereto. 3d.


business of said corporation


to be trans-

acted in Philadelphia, Pennsylvania. Said corporation is to exist perpetually. 4th. names and residences of the subscribers The 5th.

and the number of shares subscribed by each, are as

The number

of directors of said corporation

fixed at six, and the

names and residences of the




are chosen directors for the

year are as


Louis Fitzgerald, 253 Lexington avenue, A. J. Cassatt, Haverford, Pa.

New York.

Frank Thomson, Merion, Pa. Thomas DeWitt Cuyler, Haverford, Pa. Theodore Frothingham, 2035 Locust street, Philadalphia, Pa.

Clement A. Griscom, Haverford, Pa.
of the capital stock of said corporation is $500,000, divided into 5,000 shares of the par value of $100, and $50,000 being ten per centum of

The amount

the capital stock, has been paid in cash to the Treasurer of said corporation, whose name and residence are:


Gordon Bromley, 3930 Walnut street, PhiladelPa. Thomas DeWitt Cuyler. (Seal)

Frank Thomson.
C. A.





Theodore Frothingham. B. Gordon Bromley.




State of Pennsylvania, County of Philadelphia,

Before me, the Recorder of Deeds, in and for the county aforesaid, personally came the above named, B.

Gordon Bromley, Theodore Frothingham and Thomas DeWitt Cuyler, who in dtie form of law acknowledged the foregoing instrument to be their act and deed for
the purpose therein specified.


my hand and

Seal of


the twenty-

seventh day of September, A. D. 1894.
Jos. K.


Acting Recorder.

State of Pennsylvania,

County of Philadelphia,

Personally appeared before me, this 27th day of

September, A. D. 1894, B. Gordon Bromley, Theodore Frothingham, and Thomas DeWitt Cuyler, who being
duly sworn, according to law, depose and say that the
statements contained in the foregoing instrument are

Sworn and subscribed before me,

the day

and year

K. Fletcher,

Acting Recorder.

Thomas DeWitt Cuyler,
TirEODORE Frothingham,

Gordon Bromley.
Back of






Harrisburg, October 24, 1X94.


the Secretary of the


Having- examined the within application and found of the it to be in proper form, and within the purposes class of corporations specified in Section 2 of Act, entitled


act to provide for the incorporation

and regu

approved April 29th, thereto, I heresupplements A. D. 1874, and the several by approve the same, and direct that letters patent issue according to law.
lation of certain corporations,"

* * *

E. Patterson,



Enrolled in Charter Book No. 44, Page 30. Witness my hand and Seal of office, at Harrisburg,
this 24th

day of October, A. D. 1894.
A. L. TlLDEN, Deputy. Secretary of the Commonwealth.

Charter of the Imperial Trust


of Montreal,


Edward VII, Chapter 79.) Cassils Mclntyre, merchant; William Whereas, Edmund Arthur Robert, manufacturer; James Ross, accountant; Frank Howard Wilson, merchant; George
Ross Robertson, insurance broker, all of the city of Montreal, have presented a petition praying for the passing of an act to incorporate a company under the name and style of "The Imperial Trust Company" \^v the purpose of doing a general trust and agency business and as a safe deposit company and general financial






and whereas



expedient to grant such peti-

Therefore, His Majesty, with the advice and consent of the Legislative Council

and of the Legislative As-

sembly of Quebec, enacts as follows The said William Cassils Mclntyre, Edmund I. Arthur Robert, James George Ross, Frank Howard Wilson, and George Ross Robertson, together with such persons as may become shareholders of the company, are hereby incorporated and constituted a body corporate under the name of "The Imperial Trust Company." The head office of the company shall be in the II. city of Montreal, and the company may establish branches in other places. III. The company is hereby authorized and em-



and execute all such trusts as may be committed to the company by any person or persons, or by any corporation, or by any court of law, on
accept, fulfil


such terms as


be agreed upon, or as the court shall
approve, and which are not contrary

in case of disability

to the provisions of the Civil Code,

and to take, receive, and property, both real and personal which may, be granted, committed or conveyed to the company with its assent upon any such trust or
hold and convey


Generally, to act as agent or attorney for the

transaction of business, the
dividends, mortgages, bonds,


of estates, the

investments and collection of moneys, rents, interests,
notes and other securito act as agent for the

purpose of registering, issu-

ing and countersigning the transfers and certificates of
stocks, debentures or other obligations of the


of Canada, or of any province thereof, or any corpora-








tion, association, municipality or person,

and to receive such term therefor, on fund and manage any sinking may be agreed up< >n To construct, maintain and operate or lease 3. suitable buildings and structures for the reception and
storage of

moveable and personal property of every nature and kind; to act as agent, consignee and bailee thereof, and to take all kinds of personal property for deposit and safe keeping, on such terms as may be agreed

upon, and to

make loans on the same To lend money upon such terms

expedient, with

to take security for the

any other indebtedness owing to estate, ground rents, Dominion, provincial, British, foreign, or other public securities, or upon the stocks, shares, bonds, debentures or other securities of any municipal or other corporation, or upon goods warehoused or
pledged with the company, or upon such other securities
or guarantees as are deemed expedient, and to acquire, by purchase or otherwise, any of the aforesaid property
or assets, which

deemed same or the company, upon real
as are

may have been pledged with

the com-

pany, as security for such loan or indebtedness, and to
resell the

act as


an agency or association for or on

behalf of others


with money for loan

repayment of the principal, or the payment of the interest, or both, of any
or investment; also to secure the

moneys entrusted with

company for investment and. for the purpose of securing the company against loss upon any guarantee or obligation, or any advance made by the company, to receive and dispose of any descripti< m

of asset or security, which


conveyed, pledged, mort-

gaged or assigned


or warehoused with the company,


in connection


with such guarantee, obligation, advance

or investment;

To promote, or assist in promoting any other 6. company, and to subscribe for, buy and sell debentures, mortgage debentures, stocks, bonds and securities of any other company, and otherwise to employ the money or credit of the company in any manner deemed expedient for any such purposes, either by actually employing any
for such puror underwriting, or market, on the poses or by placing guaranteeing the issue of, or the payment of interest on

portion of the

moneys of the company

mortgage debentures, or securities of any other company to act as agent for the purpose of collecting and converting into money its securities and property pledged, and to administer, close and wind
the shares, debentures,

up the business of

estates, persons, partnerships, asso-

ciations or corporate bodies,

do such incidental acts and things as are necessary for such purposes To act as trustee in respect of any debenture, 7.


bond, mortgage, hypothec or other security, issued according to law, by any municipal or other corporation
incorporated in the Province of Quebec, or elsewhere, or

by any province of Canada, or by the Dominion of Canada, or on foreign legislation or authority; To accept and hold the office and perform all the 8.

of receiver,






benefit of creditors, sequestrator, guardian, liquidator,

executor, administrator and curator to insolvent estates,

appointed thereto by any person, either by deed, inter vivos, or by last will and testament, or by any court notif

withstanding the provisions of articles 364, 365, 366 and 367 of the Civil Code, preventing a corporation from acting in any of the said capacities, which articles shall in no

wise affect the said company;



Besides the real estate acquired and held by the company in the course of the due carrying on of its business, to acquire, lease, hold and convey real estate

an amount not exceeding one million dollars, and


addition thereto:

Such real estate as may be taken by it in compromise or payment of any preexisting indebtedness; any judicial (/;) Such as may be purchased by it at or other sale, in foreclosure, or for the enforcement of
any claim, mortgage, trust or agreement in the nature of a pledge or mortgage of the same, acquired or taken by the company in the course of the due carrying on of


To guarantee



to or quiet


of property, either absolutely or subject to any qualifications and conditions, and to guarantee any persons interested or about to become interested in or owning



purchase or acquire any real property,

against any losses, actions, proceedings, claims or demands by reason of any insufficiency or imperfection or
deficiency of

or in respect of encumbrances, bur;

dens or outstanding rights also to guarantee any company, corporation, person or persons against any loss or damage by reason of the failure on the part of any

company, corporation, person or persons to make clue payment of the whole or any part of any loan, advance, mortgage, bond, debenture or claim, hypothecary or otherwise, or the interest thereon, and to issue its guarantee certificates or policies in such form as it may determine, and for such remuneration as it may fix;

To borrow money

at such rates of interest as

be agreed upon, with full power to secure such loans by any mortgages, hypothecs, stocks, bonds or other


securities of or belonging to the






To examine,

report upon and audit the books,

accounts, condition and standing of corporations, partnerships and individuals, when requested or authorized
so to do by such corporations, partnerships or individuals, and also when required by an order of a court

of competent jurisdiction;




and invest

in the stock, bonds,

debentures, or obligations of municipal or other corporations, whether secured by mortgage or otherwise,
or in Dominion, provincial, British, foreign or other public securities, and to purchase shares in the capital
stock of other trust companies or other corporations doing a similar business, and to purchase the assets of

any of the said companies, or to amalgamate with any of the said companies To guarantee any investment made by the 14.


as agent or otherwise

mortgage or hypothecate any mortgage or other security or any other real or personal property held by the company from time to time; Generally to charge for, collect and receive all 16. agreed or reasonable remuneration, legal, usual and customary costs, charges and expenses for all or any of the




services, duties, trusts or things,

rendered, observed,

executed or done, in pursuance of any of the powers of
the company.


Subject to the provisions of the act 63 Vic-

toria, chapter 44, the

company may be surety upon any
judicial proceeding, and, subject

bond required



to the discretion of the court, judge, or official receiving

such bond, the surety of the company shall
cases where

suffice in all

two sureties are now may arrange company The







necessary, such remuneration as
being- such surety.


be agreed

upon for

The company may execute manager or secretary signing
attaching the company's

the security bond by the

for the

company and

seal thereto.


complete record of

such bonds shall be kept

at the head office of the company, and shall be, at all reasonable hours, open for the inspection hereinafter




directors of the

company may, with


consent of the shareholders, at a special meeting duly
called for the purpose, create

and issue debenture stock, such terms and bearing on such amounts and manner,

such rate of interest, as the directors, from time to time, think proper, but such debenture stock shall be treated and considered as part of the ordinary debenture debt
of the company, and shall be included in estimating the


liabilities to

the public, and such debenture

stock shall rank equally with such ordinary debenture debt, and no greater rights or privileges shall be con-

ferred upon holders of debenture stock in respect thereof than are held or enjoyed by holders of ordinary debentures of the company.


The debenture stock aforesaid shall be entered by company in a register to be kept for the purpose in
names and addresses of

the head office of the company, wherein shall be set

forth the

time, entitled thereto, with the respective

from time to amounts of the said stock to which they are respectively entitled, and such stock shall be transferable in such amounts and in
such manner as the directors
at all





register shall be accessible for inspection

and perusal, reasonable times, to every debenture-holder, mort-

modified or repealed provided always that no such by-laws. at any time. bond-holder. may.376 TRUST COMPANY LAW gagee. The company shall be managed by a board of directors of not more than fifteen and not less than five in number and the said William Cassils Mclntyre. as it thinks fit. and not elsewhere. but the said transfers may be left with such agent or agents in the United Kingdom of Great Britain and Ireland as the company appoints for that purpose. passed and approved of by a major- . and for the interest of the company. and such by-laws may be . VI. shall be valid or acted upon until sanctioned by a resolution of the company. Edmund Arthur Robert. but only with the consent of the holders thereof. James George Ross. without the payment of any fee or charge. All transfers of debenture stock of the company shall be registered at the head office of the company. with the consent of the directors. amended. and shall hold office until the first election of directors. exchange such debentures for debenture stock. from time to time. of directors may. The company. Frank Howard Wilson and George Ross Robertson shall be the first or provisional directors of the company. The holders of the ordinary debentures of the com- pany may. buy up and cancel the said debenture stock or any portion thereof. and shareholder of the company. having issued debenture stock. of the company. from time to time make out and adopt any by-laws specifying the conditions and qualifications required of a shareholder to be eligible as The board director altered. for transmission to the company's head office for registration. debenture stockholder. passed in virtue of this section.

. The directors may. by an advertisement inserted three times consecutively. to an capital stock of the company may be inamount not exceeding five million dollars. Notice of such increase shall be given by the company in the Quebec Official Gazette. shall not The company commence business its until five hundred thousand dollars of authorized capital have been subscribed fifty and two hundred and paid up. voting by person or proxy at a special general or annual general meeting it \ of the company. consisting of not less than three members of the board. and generally to do all such other acts as may be necessary for the organization of the company. X.( ANADIAN < li 377 of the shareholders of the company. and such stock be issued. procure subscribers thereto. divided into ten thousand shares of the value of one hundred dollars each. by by-law. thousand dollars have been IX. delegate such of their powers as they may see fit to an executive committee. sold or allotted as the directors may determine. capital stock of the VIII. shareholders shall have one vote for every share held by them and may vote by proxy in the hands of another shareholder. directors are authorized to open stock-books. The creased. At all meetings of shareholders. The provisional VII. from time to time. The company shall be one million dollars. duly called by notice and statin-.of shareholders. and to call a general meeting. or as may be defined by a by-law passed by the shareholders. at a shall by a vote of the majority of shareholders present meeting duly called for the purpose.that such byrlaw or by-laws shall be submitted to such meeting.

during the two months after such sale. then the said company or one or a greater number of the shareholders of the company. or if they have been transmitted by legacy. the company's capital stock are offered for sale. coercive secretary or The president. offer of sale or transfer shall have been served upon the company. the vice-president. those cases in which individuals exercising the same function would be liable. any shares of results of the company's operations as . or if the sale has not been recorded in the company's books. after such delay to allow the company to deliberate and after such order and on such conditions as regards the rethe spective shareholders. such estimation to be based on the financial shown by the statement of its affairs before them and if. XIII. have the privilege of acquiring the shares so offered for sale or transferred as aforesaid. In the investment of any moneys received in by the company any of the capacities or qualities set forth in article 981 o of the Civil Code.378 TRUST COMPANY LAW XI. XII. at any time during the course of the following year. the marriage of a female shareholder. on payment or offer of the price of such shares calculated according to their value as established at the last annual meeting of company. the company having the first privilege of acquiring them and afterwards the shareholders. and the manager of the company. personally. or in any other manner whatsoever. shall be liable to in imprisonment. inheritance. the company shall be subjected to the provisions of the said article. shall. . as may be determined by the by- laws of the company. At each annual meeting it shall be the duty of the shareholders present to estimate and establish by resolution the real value of the shares of the company's capital stock.

so that at no time shall trust moneys form part or be mixed with the general assets of the company. and the company shall.. the company may. keep distinct records and accounts of all operations connected therewith. and in the overseeing. in the registers and other books of accounts kept by the company. and such trust moneys and other property shall not be liable for the ordinary debts and obligations of the company. cause to be sent to the person or per- whose name such safe or box stands upon the books of the company. notifying. unless the court see otherwise to direct. XV. XVI. if the amount then due for the use of such safe or box is office not paid within sixty days from the date of such notice. whenever the company is appointed to any office. The moneys and distinct securities of each trust shall in always be kept from those of the company and separate accounts.and management of trust and other property. at the expirain the receipt of rents. and so marked in the hooks of the company for each particular trust as always to be dis tinguished from any other. the company in opened then cause such safe or box to be accordance with the provisions <>f this section will .such person or persons that. it shall not be required to give any security other than its own bond for the due performance of its duties in connection with such fit XIV. as recorded in the books of the company. tion of such year. CANADIAN CHAR1 379 Notwithstanding any law or rule of practice to the contrary. When the amount due for the use of any safe or box in the vaults of the company shall not have been paid for one year. a notice in writing contained in sons in a securely closed postpaid registered letter directed to such person or persons at his or their respective postaddress or addressed. office.

when marked for identification by such notary. and the contents thereof. in the presence of the president or managing director or secretary of the said company and of a notary public. AN ACT TO AMEND THE CHARTER OF THE IMPERIAL TRUST COMPANY (6th Edward VII. politic the Imperial Trust Company. and the estimated value thereof. and the packages so sealed and addressed. 5 is Edward VII. with the advice and consent . Therefore. to-wit. for authorization to empower and allow the said interest company to receive money on deposit inci- on the same. shall be deposited by him in one of the general safes or boxes of the company. not an officer or in the employ of said company. of its operations to the lieutenant-governor in council. Chapter 74) (Assented to 9th March. desirous of obtaining further powers granted by said act of incorporation. 1906) Whereas. if any. His Majesty. XVII. XVIII. incorporated by the Legislature of the Province of Quebec. its and corporate. with other powers dental thereto.380 TRUST COMPANY LAW if such amount be not paid within such sixty days. to be sealed up by such notary upon which said notary shall distinctly mark the names and addresses of the person or persons in whose name or names such safe or box stands upon the books of the company. a body chapter 79. of its This act shall come into force on the day sanction. The company shall make an annual report public in a package. the company may cause such safe or box to be opened and.

"18. enacts as follows: The Act 5 Edward VII. To purchase bills of exchange and generally do an exchange business with Great Britain and Ireland.CANADIAN CHARTER 381 of the Legislative Council and of the Legislative As- sembly of Quebec. This act shall and foreign countries. To receive money on deposit and allow interest on the same. by the addition to section 3 of the following paragraphs: "17. chapter 79. British possessions II." come into force on the day of its sanction. is amended I. .

Board of Directors or Executive Committee whenever they deem it necessary. and it shall be their duty to order and call . The regular annual meet- ing of the stockholders shall be held at the principal office of the company in the City of Chicago. Special meetings of the § 2. at two (2) o'clock p.. Illinois (unless some other place is designated by the Board of Directors or Executive Committee). the same may be held at any time thereafter upon notice. Annual Meeting. or the business thereof may be transacted at any special meeting called for that purpose. as hereinafter provided. stockholders may be called by the President. m. it shall be held on the next succeeding day. on the second Monday of January. Special Meetings. If for any reason the annual meeting shall not be held at the time herein provided. If the may come day fixed for any annual meeting shall be a legal holiday. for the election of directors and the transaction of such before the stockholders for other business as action. in each year.TRUST COMPANY BY-LAWS BY-LAWS OF AN ILLINOIS TRUST COMPANY ARTICLE I Meetings of Stockholders § 1.

and the business of such special meeting shall be confined to the objects failure to mail notice of the annual meeting stated. meeting. Xotice of the time and § 3. such votes in may be cast cumulatively. when all of the stockholders are present in person or by proxy. Meetings of the stockholders may be held at any of the stock- time. or by delivering the same personally. § 4.ILLINOIS BY-LAWS 383 such meetings whenever persons holding one-fifth (1/5) of the outstanding capital stock of the in writing. at least ten (10) days before the paid letter. which vote may be given personally or by proxy authorized in writing. Any or all of the stockholders may waive notice of any meeting. At all meetings of the stockhold- ers each stockholder shall be entitled to one vote for each share held by him. Notice of Meetings. meeting of the stockholders shall be given by the Secretary to each of the stockholders by posting the same in a postage preplace of the annual and of any special addressed to each stockholder at his last known place of business or residence. in the same manner as the annual meeting. in City of Chicago (unless some other place be designated by the President. and consent to the holding of such meeting. and. Voting. Such special meetings shall tin- he held at the principal office of the company. company shall. the stuck accordance with law. without notice. At each meeting of . The notice of a special meeting shall also set forth the objects of the meeting. and the presence of a stockholder at any meeting shall be deemed a waiver of notice thereof by him. at elec tions for Directors. A shall not invalidate the proceedings of the meeting. or when all holders waive notice. request the same. Executive Committee or Board of Directors).

all holders a order. shall be decided by three inSuch inspectors shall be appointed by the spectors. Board of Directors before or at the meeting. and the accept- ance or rejection of votes. and all questions touching the qualifica- At each meeting tions of voters. and certified by the Secretary. of true and complete list. shall be entitled to vote at such meeting.384 TRUST COMPANY LAW full. unless the representation of a larger law. or be unable to serve. Only the persons in whose names shares of stock shall stand on the books of the company at the time of the closing of the transfer books for such meeting. in alphabetical the stockholders entitled to vote at such meeting. person shall be appointed an inspector who is a candidate for election as a Director. indicating the number of shares held by each. . shall be furnished. represented in person or by proxy a at any meeting of the stockholders. for any reason. inspectors in No place thereof shall be appointed in like manner. the validity of proxies. of the stockholders the polls shall and ballots shall be received and proxies be opened. the taken in charge. then by the If. or if no such appointment shall have been made. as evidenced by the list of stockholders so furnished. presiding officer at the meeting. shall constitute quorum for the transaction of business. Quorum. The holders for the time being of a majority of the total number of shares of stock issued and outstanding. the stockholders attending or represented at the time and place at which a shall meeting have been called may adjourn such meet- ing from time to time until a quorum shall be present. any of the inspectors previously appointed shall fail to attend. or refuse. number shall be required by In the absence of a quorum. §5.

but in the absence of the Secretary and Assistant Secretaries. for one year and until their successors are elected and No person shall be elected a Director unless qualified.ILLINOIS BY-LAWS 385 any adjourned meeting at which a quorum shall be present any business may be transacted which might have been transacted by a quorum of the stockholders at the meeting as originally convened. § 2. ARTICLE Board § 1. II of Directors The property and business of the company shall be managed and conThe Board shall controlled by a Board of Directors. In case of any vacancies in the Directors. Section 6. resignation. shall call meetings of the stockholders Chairman of such meetings. Vacancies. the stockholders present preside at the meeting. sist of twenty-five (25) Number and Qualifications. and in his abelect a may sence an Assistant Secretary. the remaining Directors. shall act as Secretary at all meetings of the stockholders. disqualification or other cause. who shall hold office members. Presiding Officer and Secretary. free of any lien or incumbrance. Chairman to The Secretary. such person shall own in his own name. through death. by the affirma- . the stockholders or presiding officer may appoint any person to act as Secre- tary of the meeting for the time being. at least ten (10) shares of the capital stock of the company. The and at President. and in his absence a Vice-President. or represented at the meeting to order and shall act as In the absence of the President and Vice-Presidents.

in the judgment of the President. Notice of each regular meeting of the Board of Directors shall be mailed by the Secretary to each director at his last known place of business or residence not later than three o'clock for the meeting. Special meetings of the Board shall be held whenever called by the President.the transaction of any business which may come before the Board. m. Illinois. Regular monthly meetings of Board of Directors shall be held at the office of the company in Chicago. or special company. Executive Committee or any three diAt the monthly meeting next following the rectors. of business.. The Directors shall act only as § 3. Quorum. ]>. to time until quorum § 4. at the hour of three o'clock p. and an individual director shall have no power tive vote of two-thirds (2/3) thereof. Nine directors at a meeting duly called shall constitute a but a less a quorum for the transaction number may adjourn from time Meetings. Notice of Meetings. a sudden emergency requires. annual meeting of the stockholders the directors shall elect the officers of the § 5.386 TRUST COMPANY LAW have power to appoint the members necessary to make up the full number. shall be present. a board. the President may call a special meeting upon notice delivered or tele- phoned to each director to his usual place of business (or to his residence if he have no usual place of business) at . shall as such. m. for. that in case. but such appointment shall continue only until the next annual meeting of the stockholders or until their successors are elected and qualify. however. on the fourth Tuesday of each month (if not a legal holiday. and if a legal holiday on the next sucthe ceeding day not a legal holiday). on the day previous to that fixed Provided.

not an officer of the company. and the Secretary. Compensation. not an officer of the company. may waive notice of any meeting-. or an Assistant Secretary. or any of the directors. not less than seven (7). Directors shall annually appoint from (other than officers of the company) persons. attending such meeting shall receive the sum of ten dollars. Presiding Officer. and the presence of any director at a meeting of the Board shall be deemed a waiver of notice thereof by him. § 7. shall preside. All. the President. Meetings of the Hoard may be held at any time. At all meetings of the Board of Directors. or in his absence a Vice-President. regular or special. Number and Qualifications. as an Executive Committee. of which the President. and for his attend- ance at any meeting of any committee each director. or . For his attendance at any meeting of the Board of Directors each director. without notice. §6. and for any purpose.ILLINOIS BY-LAW 3><7 least <>ne hour before the time fixed for the meeting. The notice of a special meeting need not stair the ob- jects thereof. ARTICLE III Executive Committee § 1. as The Board of its own members such number of it may determine. attending such meeting shall receive the sum of twenty dollars. when all the members are present or whenever all of the directors shall waive notice and consent to the holding thereof. shall record the proceedings of the meeting.

as may time and place as be provided by mittee. its rules or by resolution of the com- . shall direc- and affairs of the in such manner as the Executive Committee all deem best for the interests of the company. The Executive Committee shall adopt its own vote of at least three (3) members of the committee shall Such be necessary to its adoption of any resolution. but in every case the may be provided for by the rules of It may meet at such other times and said committee. all salaries and compensations paid or payable by the company shall be fixed by the Executive Committee. and its action shall be subject to revision or alteration by the Board. The Executive Committee shall keep minutes of its proceedings and shall report its action to the Board of Directors at its meeting next succeeding such action. § 3. shall be exan additional member. During the intervals between the § 2. committee shall meet on Monday of each week at such rules of procedure. Except as otherwise provided by the by-laws or by resolution of the Board of Directors. Powers. Rules.388 in his orricio TRUST COMPANY LAW absence the ranking Vice-President. places and upon such notice. or without notice. meetings of the Board of Directors the Executive Committee shall possess and exercise each and all the powers of the Board of Directors in the tion of the business management and company. in cases in which specific directions shall not have been given by the Board. The Board of Directors fill shall promptly vacancies in the Executive Committee by election from the directors. provided that no rights or acts of third parties shall be affected by any such alteration or revision.

Executive Committee or President to give to the comof Directors may at pany such amount and containing such conditions as the Board of Directors. The Board of Directors or President may appoint such other officers as it or he shall deem § 1. he shall have general charge and . a Cashier. Board of Directors and Executive Committee. necessary. The President. one or more Assistant Secretaries. one or more Assistant Trust Officers and General Counsel. one or more Vice-Presidents.ILLINOIS BY-LAWS 389 ARTICLE IV Officers Appointment and Tenure. The Board any time confer upon the President or Executive Committee the power to All offiselect and appoint any officers of the company. cers and agents shall be subject to removal at any time by the affirmative vote of a majority of the whole Board of Directors. with such powers and duties as from time to time may be prescribed by the Board of Directors. a Trust Officer. Executive Committee or President may require. other than officers appointed by the Board of Directors. company may be required by the Board of Directors. The President Subject to shall preside meetings of the stockholders and of the Board of the Directors. a Secretary. may be paid by the company. one or more Assistant Cashiers. shall hold office at the discretion of the committee or of the Any officer or employe of the officer appointing them. and any such bond may be a bond in the undertaking of a surety company and the premium therefor § at all 2. All officers. agents and employes. The Executive officers of the company shall be a President.

all of the duties of the President. In the event of the death. he shall have power to select and appoint all necessary officers and servants of the company. The Vice-Presidents order designated by the President. subject to the counter-signature of the teller have powder to suspend any of the officers or heads of departments until the Board or Executive Committee shall be convened. except as herein otherwise provided. in the President. who shall for the time being be vested with all the powers and required to perform shall Such person be known as the Acting President of the company. deeds and other instruments in writing in the name of the company. shall He ever he shall think fit and proper to do so. and may sign and execute all authorized bonds.390 TRUST COMPANY LAW its offi- supervision of the business of the company. and to dismiss any of the subordinate employes whenas hereinafter provided. disability or of the President. The Vice-Presidents. and may any event sign and execute all authorized bonds. drafts and orders for the payment of money issued by the company in the usual course of its business. § 3. and may remove such officers or servants (except those selected by the Board or Executive Committee) whenever he shall deem it necessary and make new appointments to fill the vacancies. except those selected by the Board or Executive Committee. Subject to the Board of Directors and Executive Committee. in the event of his absence or disability. be vested with all the powers and required to perform all the duties of the shall. contracts. the more than temporary absence Executive Committee may desig- nate any person as acting President. contracts. He shall have authority to sign all checks. and cers and employes. deeds and other instruments in writing in the in .

a statement of all his transactions as Cashier. and they shall be kept in such place or and in such manner as full may be designated by the • Board of Directors. jointly. the payment of money. showaccurate books and He ing all the receipts and disbursements of the company. as hereinafter provided.ILLINOIS BY-LAWS 391 company with like effect as though signed by the President. Executive Committee and Board of President. He shall. He shall see to the collects >n dividends. issued by the company in the name of the usual course of its business. whenever required. and of the receiving of all deposits and the paying § 4. be open and subject to the inspection and scrutiny of the President. They may countersign certificates of They may sign checks. and of the financial condition of the company. Board of Directors or Executive Committee. places. interest and other payments due on account of securities owned by the company. receipts pany. Executive Committee or Board of Directors. . with the President or such other person as may be designated by him. or their appointees. Executive Com- mittee or President. out of of all all sums of money. He shall furnish to the President. The Cashier shall have charge disbursements of the comand of the funds. a detailed account of the receipts and expenditures of the corporation for any specified period. be the custodian of all securities. and his books and papers shall. He shall render to the President. subject to the counter- signature of the teller. Executive Committee or shall keep Directors. The Cashier. notes and other evidences of indebtedness belonging to the company. at all times. drafts and orders for stock. on demand. They shall perform such other duties as may from time to time be prescribed by the Board of Directors. of account.

keep in custody the seal of the company. as provided by these by- laws) shall have power to sign checks. as pro- vided in these by-laws) checks. kept for that purpose. or any one of the Vice-Presidents duly when necessary any proceedings of the stockholders. They shall perform such other duties as may. on behalf of the company. directors and Executive Committee. 5. § 6. drafts and orders for payment of money. or books. or when any instrument requiring the corshall He porate seal to be attached shall have authorized to sign the same. for the In the absence or disability of the Cashier. Executive Committee or Board of Directors. § Assistant Cashiers. executed by the company in the its business. directors or Executive Committee. drafts and orders payment of money issued by the company in the usual course of its business. The Secretary. or first been signed by to attest the President. He shall attend all meetings of the stockholders. checks. drafts and orders for the payment of money which it may receive in the usual course usual course of of its business. and may endorse. and to endorse checks.392 TRUST COMPANY LAW He may the sign (subject to countersignature. from time to time. they shall be vested with all his powers and required to per- form all all his duties. and when authorized by the Board of Directors or Executive Committee. be prescribed by the President. shall affix it to any instrument requir- . The Assistant Cashiers (subject to countersignature. drafts and orders for the payment of money which may be received by the company in the usual course of its business. The Secretary shall record the votes and proceedings of the stockholders. di- rectors and Executive Committee in a book.

ILLINOIS BY-LAWS 393 ing the same. He shall keep the accounts of stock registered and transferred in such manner and form and under such regulations as the Board of Directors. and direction of the President (and involving extraordinary or unusual responsibility. or as the President. and shall always attest the same by his He shall have charge of Mich hooks. The Trust Department. of the . Subject to the Board § 8. or by such person as may be appointed for that purpose at the meeting. docusignature. and any act may be done or duty per- formed by an Assistant Secretary with like effect as though done or performed by the Secretary. In the absence of the Secretary at any meeting of the stockholders. Each Assistant Secretary shall possess the same powers and duties as the Secretary. directors or Executive Committee. trusts and undertakings of the company. of Directors and Executive Committee. the record of the pro- ceedings of such meeting shall be kept and authenticated by an Assistant Secretary. ments and papers of the company as properly belong to his office. §9. advice in the case of trusts of the Trust Department. §7. The Assistant Secretaries. the General Counsel shall have supervision and management of all matters of legal import concerning the company and of all litigation in which it is in any way interested. Executive Com- mittee or Board of Directors may require. The President shall designate one of the Vice-Presidents to have charge Subject to the order. and shall perform such other duties as pertain to his office. and shall when and as requested pass upon the form and sufficiency of all contracts. The General Counsel. Executive Com- mittee or President may prescribe.

The Trust Officer shall have the power. such Vice-President shall have general charge and control of the acceptance and execution of jointly any trusts in charge of the company. If. or an Assistant Secretary. or a Vice-President. He or all the Vice-President in charge shall approve in writing papers and documents of any kind which shall be executed by the company in its capacity as trustee. together with the Secretary or Assistant Secretary. He may sign (subject to countersignature by the teller. held temporarily for investment or distribution may full all be deposited with the Banking Department pending such investment or distribution. He shall. as provided in these by-laws) checks. in He shall keep a and such accurate record of the receipt and disposition of funds and property. be the custodian of all the and other property held by the company as and all the funds. addition to the Vice-President in charge of officer shall. such trust advice and approval of the President or the Vice-President in charge of the Trust Department. subject to the the Trust Department. and the Secretary.394 TRUST COMPANY LAW Executive Committee). drafts and orders for the payment of money . securities. there shall at any time be a trust officer. except that funds securities trustee. perform such duties as usually appertain to the office of trust officer. to execute in behalf of the company all docu- ments relating to the discharge of its routine duties in any fiduciary relation. with the cashier. and the all approval by either of them on ordinary instruments required in the conduct of the Trust Department shall be sufficient authority for the execution thereof by the President. securities and property held by the company as trustee shall be kept separate and apart from the funds of the company.

it shall be further under the superintendence of the manager of said deDaily reports in writing of all purchases. Contracts. sales or exchanges made by the Bond Department shall he made to the President or Vice-President in charge. shall he in his Bond Department. ager of said department. and under the superintendence of the man§ 11. The Bond Department under the order and advice of the President and absence the Vice-Presidents. Tt shall be the duty of the manager to investigate the title upon any loan proposed to be made by this department. Real Estate Loan Department. and weekly reports of the same shall be made to the Executive Committee. partment.ILLINOIS BY-LAWS 395 in the usual executed by the Trust Department of its course business. The manager ment all shall also report daily to the Trust Departis transactions in which this company designated as trustee under any such loan. §1. Daily reports in writing of all loans made and of any defaults in payment thereof shall be made to the Pre and value of the security dent or Vice-President in charge. ARTICLE V Conduct of Business No agreement or contract. other than a check or draft. shall be made without the approval of the Board of Directors . The Real Estate Loan Department shall be under the control and advice of the President. and weekly reports of the same shall be made to the Executive Committee. involving the payment of money or the credit or liability of the company. and in his absence the ViceITcsidents. § 10.

Limitations as to Loans. or an Assist- ant Cashier. Checks and Drafts. § 4. § 5. No money shall be § 3. loan money. make discounts. receive deposits and accept and execute trusts in such manner as is usual to banking and trust institutions. .396 TRUST COMPANY LAW or Executive Committee. Borrowing Money. except that the President. deeds and other instruments that require the corporate seal of the shall be signed company to be affixed by the President or a Vice-President and the Secretary or an Assistant Secretary. or em- Loans of Company Funds. Loans and investments of company funds shall be made in such manner as the Board of Directors or Executive Committee may from time to time direct. same. All contracts. borrowed on behalf of the company without the authority of the Board of Directors or Executive Committee. All checks. be made to No any loan of officer Com- pany or trust funds shall ploye of the company.000) of the combusiness also. in the ordinary course of business of the company. make conVice-President discharging his duties. tracts or obligations not involving a liability in excess and may ($25. by-laws). or by the President or a Vice-President. or may. drafts and other negotiable instruments which shall be issued by the company shall be signed by the Cashier. § 2. in the ordinary course of the pany (and subject to the limitations contained in these of twenty-five thousand dollars . and shall be countersigned by the teller drawing the Checks against Trust Department funds pertaining to the business of that department may be signed by the Trust Officer.

Loans of Trust Funds. sign on the stub a receipt for the certificate issued to him. and the Secretary or an Assistant Secretary. The person Every certificate returned to the companv for exchange of shares shall be canceled and pasted in its original place in the stock certificate book. the date of cancellation. or by agent. All such certificates shall be issued in consecutive order from certificate books and shall be numbered and registered in the order in which they are issued. Each holder of stock by the President or a Vice-President. and no new certificate shall be issued until the old certificate has thus been canceled and returned to its original place in such book. together with the number of shares and the date of such certificate. If the loan or investment is of a sum in excess of $5. I. nans and in ments of trust funds shall be made only in the following manner is of a sum of $5. If the loan or investment it under shall be ARTICLE VI Shares and Their Transfer § 1. and on the stub of each certificate shall be noted the name of the holder. . Stock Certificates.000 it shall be approved by the President or one of the Vice-Presidents and at least two (2) members of the Executive Committee. and in case of cancellation. shall be entitled to a certificate signed receiving any such certificate shall personally. except in cases provided for in section four (4) of this article.000 or approved by the President or one of the Vice-Presidents.: ILLINOIS BY-LAWS 397 §6.

to give to the company a bond issued by an approved surety company in such sum as they may be may direct. and until other- . For convenience the Board may appoint a transfer agent of the company's stock. may be deemed advisable Lost for dividend purposes. Registrar of Transfers. Transfers of stock shall be made only upon the books of the company by the holder. and Destroyed direct a The Board of Directors may new certificate or cer- any certificate or certifitificates to be cates theretofore issued by the company. as indemnity against any made against the company. in person. and on the surrender of his certificate or certificates for such shares. after the appointment of such registrar of transfers. or his legal representatives. and. § 3. issuance of such quire the new certificate or certificates. The The transfer books may transfer books may also be closed by the Board for such period as § 4. The Board of Directors may appoint a registrar of transfers of stock in the City of Chicago or elsewhere. claim that ARTICLE Seal VII The company's corporate seal is. Certificates. or by his power of attorney duly executed. no certificate of stock shall be binding upon the company or have any validity unless signed by such registrar of transfers. be closed for such period as the Board shall direct previous to and on the day of any annual or special meeting of the stockholders. may re- owner of such new certificate or certificates. alleged to have been lost or destroyed and the Board. in authorizing the issued in place of .398 TRUST COMPANY LAW § 2.

shall be. amended or repealed by the Board of Directors at any meeting. an impression upon paper or wax. ing of thirty (30) persons. ARTICLE IX Amendments to By-Laws These by-laws may be altered. regular or special. by the affirmative vote of a majority of the whole Board. Corporate Seal." ARTICLE VIII Dividends be declared by the Board of Directors out of the net profits of the company payable at any such time or times and in such manner as may be Dividends may determined by the Board. each of whom shall continue in office from the time of his election until the nexl annual meeting of the stockholders. By-Laws of Blank Trust Company 8. bearing the words: "Blank Trust Com pany of Illinois. 1902. consist 1. of New York Adopted December 1903 ARTICLE Directors I Section pany shall be The business and affairs of the Commanaged by a Board of Directors.AWS 399 wise ordered by the Board. or until another is .MEW YORK HV-I.

shall have been mailed to each director three days previous to such special meeting. All vacancies in such committee may be filled at a special by the Directors at a regular meeting. a 2. An Executive Committee shall annually shall be elected by the Directors which shall consist of nine (9) Directors who hold office until others are elected in their places. Sec. 6. 5. or meeting called for that purpose. 7. at such hour and place as shall be designated by the Board. 4. Sec. for 3. The President may whenever deemed . may be filled by the remaining directors at any regular meeting or at any filled special meeting. addressed to his last known place of residence or business to the best information had by the Secretary. be Sec. A majority of the directors shall constitute all quorum Sec. The Directors may shall give not less call special meetings expedient. resignation. Sic. that Any vacancy may occur in the Board of Directors by reason of death. Sec.. provided that if such at a special meeting a written notice of vacancy is such vacancy. of the stockholders as often as they may deem The Secretary than ten days' notice of any such meeting by mailing to each stockholder of record a notice thereof.400 elected in his place. increase in the number of directors or otherwise. purposes at any meeting of the Board. TRIST COMPANY LAW This section may from time to time amended by resolution of the Board of Directors to hx the number of directors at any number not less than thirteen (13) nor more than thirty-five (35). and that it is proposed to fill the same. The regular meetings of the Board of Directors shall be held on the second Tuesday of each month.

11. The Directors may require of all officers Company. Board of is may to be notified by the Secretary that he desirous office presumed of resigning his Director shall at the next such Director. the Directors shall submit a statement showing the situation of the property and financial affairs of the Company. satisfactory bonds for the performance of their duties. Sec. 9. without further notice to him. Every Director who shall for three sucSec. and shall whenever requested in writing by three of the Erectors.NEW VORK BY-LAWS 401 proper by him. The call for such meetings shall specify the objects thereof and shall be sent to each director not less than one day previous to such meeting. At each annual meeting of the StockSec. and unless regular meeting present an excuse for his absences satis- be as factory to the Board. submit such statement at any special meeting of the Stockholders when requested by shall also Sec. be declared to be terminated and the Board may 12. except the President and First VicePresident. 10. or by the owners of one-third I of the capital stock call special meetings of the Directors. All elections by the Directors shall be by ballot and the vote of the majority of the whole number of the Directors shall be necessary for a choice. . holders. Sec. his tenure of office may. and of all employes and clerks. The Board of Directors shall assemble immediately after the annual election for the election of officers for the ensuing year. and them so to do. cessive Directors' meetings omit to attend such meet- ings without an excuse satisfactory to the Directors. at its pleasure fill the vacancy. of the 8.

to be elected by the Board of Directors. a Third Vice-President and a Fourth VicePresident. who shall hold their offices from the time of their election until the second Thursday of January next ensuing and until others are elected in their stead. of the Company. affairs. except the President and First Vice-President.402 TRUST COMPANY LAW ARTICLE Officers II Section a President. a Second Vice- President. at least once in each quarter. a First Vice-President. loans made and con- tracts entered into all by the and servants of the Company and may suspend or remove them at his pleasure. . one or more Assistant Treasurers. The President shall preside at all meetings of the Directors and Executive Committee. The officers of the Company shall be. He shall appoint From time to time. and a Secretary and a Treasurer. ARTICLE III President Section 1. All of the officers so elected or appointed Officer shall hold their offices respectively during the pleasure of the Board. to be appointed by the Board. and property. He shall have power to make contracts and accept such trusts for the Company as in his judgment may be exe- times exercise a general supercuted by it and vision of the business. He shall report at each meeting of the Execushall at all tive Committee all trusts accepted. one or more Assistant Secretaries. clerks Company. 1. a Trust and such other officers as shall from time to time be designated by the Board of Directors. and shall be ex-officio member of the Executive Committee.

ARTICLE IV Secretary Section of all 1. and report thereon. the Sec- ond and the Third Vice-Presidents. by the Fourth VicePresident. or in case of absence of the President. and shall be filed among the records of the Company. the securities owned and compare or held in trust. whose duty it shall be to make a thor- ough examination of the affairs of the Company. In each month in which a quarterly examination does not occur. the President shall appoint a Committee of one or more Directors. the First.NEW VORK BY-LAWS 403 the President shall appoint a Committee of nol less than three Directors. case of his absence by the Second Vice-President . his powers shall be exercised and his duties discharged by the First Vice-President. the First and Second Vice-Presidents. . and compare the amount so found with the general ledger of the Company. 2. The reports of the above Committees shall be signed by each member of the Committee. absence. or at least by a majority thereof. or in case of the absence of the President. by the Third Vice-President. and the assets and liabilities so found. to count the cash on hand. The Secretary shall keep the minutes meetings of the Stockholders. and report thereon. Company. Board of Directors. with the amounts stated in the hooks of the. who shall on such day as he or they may select and without notice. count the cash on as collateral for loans. or inability in of the President. or. In case of the death. hand. Sec. with discretionary power to employ expert accountants t" that end.

or indebtedness and of all financial transactions of the Company.404 TRUST COMPANY LAW all Executive Committee and other Committees that may require his services. or. as the President may designate shall per- form his duties. perform his duties. Whenever any stock shall be trans- . ARTICLE VII Executive Committee Section 1. subject to the supervision of the President or Vice-Presidents. He shall be the custodian of the funds and securities of the Company. and shall perform such other duties as the President or Board of Directors In the absence or disshall from time to time direct. the Secretary or an Assistant Secretary. the Treasurer. or an Assistant Treasurer. ARTICLE V Treasurer Section 1. and perform such other duties as the President or Board of Directors shall from time to time direct. as the President shall may designate. ability of the Treasurer. In the absence or disability of the Secre- tary. an Assistant Secretary. The Trust Officer shall give his special attention and supervision to the various trusts accepted by this Company and shall see that proper records thereof are kept. The Treasurer shall keep or cause to be kept permanent records of the evidences of property. ARTICLE VI Trust Officer Section 1.

one of the The Executive Committee shall meet at offices of the Company on one day of every week and Sec. NEW YORK BY-LAWS ferred to the shall be held 405 Company as security for a debt or loan by the Company as an investment or Company under and pursuant whatever. and shall have power to direct the President or the First Vice-President to sell. shall constitute a quorum f< >r the transaction of business. 3. personal securities. all tend and advise investments that shall be made of the funds of the Company in stocks. or a majority of the Committee. The Executive Committee shall fix the compensation and these by-laws. the or as Trustee. clerks and employes. and shall superintend all special trusts. 5. Executor or Administrator. except as specifically provided in . Guardian. The Executive Committee shall superinSec. may appoint. at such other times as they 4.. tee. if the President or first Vice-President be absent. may define the duties of all officers. or shall be transferred to the to the execution of any trust Executive Committee same. and bonds and mortgages. Sec. The Executive Committee may in its discretion. authorize the President to make investments in personal securities without previously consulting the Committee but all such transactions shall be reported to the its Com- mittee at next meeting. assign and transfer the when necessary. Sec. to affix the seal of the Comeffect pany as the to such transfer with the same force and Hoard of Directors might exercise in such case. Four members of the Executive Commit- together with the President or First Vice-President. 2.

2. or under in its corporate charge. 2. Sec. and the polls shall remain open until 4 P. In case of failure of any Inspector to attend or serve. No loan on bond and mortgage shall be made without Committee. Notice of the time and place of holding such meetingshall be given as required by law and shall be mailed to each stockholder at his business. Three Inspectors of Election shall be elected at each annual meeting of the Stockholders. to serve at the next succeeding annual meeting. shall be deposited therein to the credit of the Company name. the approbation and concurrence of the President or his authorized substitute and the Executive . The annual meeting' of the office Stock- holders shall be held at the principal of the Com- pany on the second Thursday of January of each year at 3 P. ARTICLE IX Regulations for the Transaction of Business Section its 1. 3. M.406 TRUST COMPANY LAW ARTICLE VIII Stockholders Section 1. No business meeting of the Stockholders not specified in the call for such meeting or at an adjourned special meeting not specified in the original call. deposited in any bank. the vacancy shall be filled by the Chairman of the Stock- holders' meeting. All money of the Company. at least last known residence or place of two weeks before such meeting. Sec. shall be transacted at a special Sec. M.

Certificates for money received in trust. be pavable only on the production of the original certificate. All certificates of trust or deposit previous to their being issued. Sec. to be kept for that purpose. 6. registered and described. shall be registered in a certificate book. \07 The seal of the Company may be in dupli cate. one of the duplicates to be kepi at the main office and the other at the down town office of the Company. the Assistant Secretary or the Assistant Treasurer. when paid in full. if the original be lost or destroyed. NEW YORK BY-LAWS Sec. and filed away. and to this end proper certificate books shall be prepared with sufficient margin. All checks and drafts of the Company . when required by the persons creating the trust but in such cases the money received shall. Sec. Report shall be made by the President at the next meeting of the Executive Committee of all cases in which the seal has been affixed under his direction. and all certificates. shall be cancelled. All certificates of stock of the Company by the President or one of the VicePresidents and by the Secretary. and Transfers shall be made shall bear the corporate seal. defaced. and may be attested by any one of such offiIt shall be affixed to all instruments requiring a cers. custody of the Secretary or the Treasurer. when due. 3. in which each certificate shall be numbered. or its substitute. shall be issued. Sec.. 5. specifying the duration and terms of the trust. the Executive Committee or the President or his authorized substitute. The seal shall be in the seal upon the direction of the Board of Directors. shall be signed on the books of the Company only by the stockholder or his duly authorized attorney. or. Treasurer. 4.

Report of the President. Reading the minutes of the meetings of the 2. Treasurer. provided that no amendment shall be made except of Section 1. and of any special meeting held since the minutes were last read. 3. ARTICLE X Order of Business Section 1. meeting. Assistant Secretary or Assistant Treasurer. At all regular meetings of the Board of Directors the following shall be the order of business Reading of the minutes of the last regular 1. Executive Committee that have taken place since the meeting of the Board. 7. 4. Miscellaneous business. last 6. Section 1. 5.: 40S shall be signed TRUST COMPANY LAW by the President or one of the Vice- Presidents and countersigned by either the Secretary. which may be en- dorsed in such manner as shall be directed by the President. except such as are deposited in bank to the credit of the Company. Report of the Secretary. Reports of Committees. and checks. Unfinished business. ARTICLE XI Amendments These by-laws may be amended at any regular or special meeting of the Directors. drafts and notes payable to the order of the Company must be endorsed by the President or one of the Vice-Presidents. . unless dispensed with by vote.

convened by the President and Secretary at the hour of nine o'clock a. The annual meeting of Company for the election of the stockhold- Directors and the transaction of other business shall be held at the office of the Company in the City of St. unless longer notice is required by law a daily for such meeting on account of the business to be trans- acted thereat. State of first Monday of February in each year. newspaper published in the City of St. Notice of the place. within that period. At each annual meeting the stockholders attending in person or by proxy in writing shall elect by ballot. unless written notice specifying the nature of such amendment shall have been sent to each of the Directors at least five days previous to such meeting. and continue at least three hours. copy of said notice shall also be mailed to each stock- A . and then for such time as by law required. and upon any proposition presented to said meeting. m. By-Laws of the Mississippi Valley Trust of St.MISSOURI BY-LAWS 409 Article 1. Louis. hour and objects of each annual meeting of stockholders shall be given by the President and Secretary by publishing the same in Sec. have been voted for the election of Directors. Directors for the term of three years to succeed Missouri. I ARTICLE Stockholders Meetings Section ers of this 1.sjiall. unless all stock issued and outstanding. on the shall be and the class of Directors then retiring. Louis. daily for two weeks next preceding the day of the meeting. Louis. Company. Mo. Missouri. 2.

5. in case of failure and Secretary. No person shall be admitted to vote at any annual meeting held as in this section provided for. at least one week before the day of such meeting. except those who would have been entitled had such annual meeting taken place on the day when it ought to have been held. The stockholders present in person or by proxy. or whenever stockholders holding twenty (20) per centum in amount of the capital stock issued and outstanding request him in writing so to do. so to do. and by the Directors or by the President any five stockholders may give or cause said notices to be given and said meeting to be held. Sec. Sec. postage prepaid. for any it reason. respectively. and of the President and Secre- tary to give notice thereof as above provided for. being not less than five (5) persons and representing not less than a macalled . shall be the duty of the Board of Directors to notify and cause such meeting to be held within sixty days after the day so appointed. at least one known business address. hour and objects of every special meeting shall be given by the President and Secretary by publication thereof in the manner above provided for notice of annual meetings. Special meetings of the stockholders may be called by the President at any time. and a copy of such notice shall also be mailed to each stockholder at his last known business address. "postage presaid meeting. at any stockholders' meeting. unless a longer notice therefor is by law required.410 TRUST COMPANY LAW holder at his last paid. week before the date of Sec. 3. be held on the day appointed therefor. 4. Notice of the place. If the annual meeting should not. and shall be by him whenever so directed by resolution of the Board of Directors.

7. multiplied by the be elected.MISSOURI BY-LAWS 411 jority of all the shares of stock. shall constitute a quorum is for the transaction of business. and said proxies shall be filed with the inspectors of election and by them deposited with the Secretary of the Company after the votes have been counted. The stockholders present any meeting. who are not Directors. appoint not less than two shareholders. as inspectors to receive and canvass the votes given at such meeting and certify the result to him as by law required. each shareholder shall have the right to cast as the aggregate as shall equal the many votes in by him or her. before such meeting. for one candidate. be cast in person or by proxy in writing. Sec! 6. 8. Each share of and stock shall entitle its owner to one vote. completed. may adjourn future- no business shall be transacted journed meeting which would not have been time. or distribute them among two or more. to a at in though less than a quorum. whenever demanded by any stockholder. . If the object of any meeting of stockholdSix:. and may cast the number number of Directors whole number of votes of shares held to in person or by proxy. in case of election for Directors. any stockholders' meetuntil its business at ing may adjourn from time to time. At every stockholders' meeting votes may Sec. ers be to elect Directors or to take a vote of the stock- holders of this Company on any proposition in the notice of such meeting. and at every stockholders' meeting a vote by stock tion shall be taken upon any proposi- which may come before the meeting. but any adorder at the original meeting. the President shall.

Each vacancy in the Board of Directors may by the survivors until the next election of the class to which the outgoing Director belonged. which shall be divided into two classes of eight members each. be filled rectors shall be held at the office of the Company in the City of St. for a term of three years. in the second week of each month and at such time as it may from time to time determine. and a majority of the shall constitute a members of the Board but a less quorum for the transaction of business. At all regular meetings Sec. Reports of officers. Louis. the members of one of these classes shall be elected by the stockholders by ballot at the annual stockholders' meeting in February. if a of the quorum be not present. 5. Regular meetings of the Board of DiSec. and until their successors shall be elected. 2. ings held since the minutes of the Board were last read. and the members of one class each succeeding year thereafter.: 412 TRUST COMPANY LAW ARTICLE Directors II Section 1. 4. 3. Reading minutes of Executive Committee meet3. Reading minutes of stockholders' meetings. Board of Directors the following shall be the order of business. Calling the roll. 2. Sec. . 4. The affairs of this Company shall be controlled and managed by a Board of twenty-five Directors. Reading minutes of all Board meetings not previously read and approved by the Board. and one of nine members. Missouri. number may adjourn to another date. unless otherwise ordered by two-thirds of the Directors present 1.

elect its officers by ballot. Notices of regular meetings of the Sec. Special meetings of the Board of Direct- irs shall be held within two weeks after every stockholders' meeting. 8. business and property of the company. specifying the time and place of meeting and addressed to him at his last known business address. as circumstances may require. Notices of special meeting shall be in writ- purpose for which they are called. or prescribe how They shall have full statements of the condition of the affairs of the Company made out and exhibited to the stockholders at least once in each year. postage prepaid. Reports of committees. Sec. and altered or changed by them Sec. 7. unless a regular meeting of the Board is to be held within that time. fix compensation of the officers same shall be fixed. appoint committees. not less than twenty-four hours before the hour of meeting. 6. and prescribe the duties of officers and committees when not denned in these by-laws. or of any five (5) Directors. New business. and may be held at any time on the call of the Chairman of the Board or the President. . and employes. briefly indicating the control and management of the affairs.MISSOURI BY-LAWS 413 6. 5. ing. and be delivered at the place of business of each director at least one hour before the hour of meeting. General rules and regulations for the conduct of the business of the Company shall be made by the Board of Directors. The Board of 'Directors shall have the Sec. Unfinished business. from time to time. 8. Board of Directors shall be given by the Secretary by mailing a written or printed notice of the same to each Director. 7.

Sec. may ARTICLE III Executive Committee Section 1. Members of the Board of Directors. powers of the Board it can lawfully exercise during the intervals between Board meetings. by resolution direct and authorize. An Executive Committee. In the event of the sickness or absence from the city of a member of the committee. unless the committee shall otherwise direct. and perform such special duties and exercise such special powers as the Board of Directors may. superintend and advise all investments that shall be made of the funds of the Company. it and at such other times as may determine. of the Committee that may Executive Committee. consisting of the Chairman of the Board. Minutes of the meetings of the Executive recorded in chronological order in the Committee shall be . and the Committee on Trust Estates. shall be elected by said Board. the President. from time to time. or as it may be called to meet by the Chairman of the Board or the President. 9. 2.414 TRUST COMPANY LAW Sec. designate any Director to act in the place of the committeeman during such disability. by ballot. Sec. 3. notices of which shall be given as in the case of the Directors' meetings. shall receive such compensation for at- tendance at meetings as the Board of Directors determine. the Chairman of the Board or the President may. and five (5) other members of the Board of Directors. The Executive Committee shall meet at shall exercise all the which the office of the Company at least once in each week. from time to time. VicePresidents. or members of any Special be appointed.

3. shall be elected annually by the Board of Directors by ballot. may be in- creased or decreased at any time by the Board of DiSec. shall have general supervision of the Trust Department.MISSOURI BY-LAWS 415 which the minutes of the meetings of the stockholders and of the Hoard of Directors are recorded. In the event of the sickness or absence from the city of a member of the Committee. conof the Chairman of the Board.meeting of the Hoard of Directors as the report of that Committee to the Board. from time to time. and shall be read at the next succeeding. notice of which shall be given as in the case of Directors' meetings. designate any director to act in the place of the Committeeman during such Committee shall be filled disability. meet at the The Committee on Trust Estates shall office of the Company at least once in each week. the President. including specially the management of trust estates. together with any special report that said Committee may wish to make same minute book of the Company in to the Board. 2. subject to the control of the said Board and the Executive Committee. the investment of all trust funds and the disposition of Sec. ARTICLE Section sisting five 1. Vacancies in the The number rectors. III-a COMMITTEE ON TRUST ESTATES Committee on Trust Estates. of members in the by the Board Committee of Directors. all trust assets. or as it may be called to meet by the Chairman of the Board or the President. unless the Com- mittee shall otherwise direct. and A members (who may or may not be Directors). and at such other times as it may determine. the Chairman of the Board or the President may. not contained in said minutes. and. .

a Real Estate Officer.416 TRUST COMPANY LAW Sec. one or more Assistant Real Estate Officers. qualified and enter upon the discharge of their duties. one or more Assistant Secretaries. ARTICLE IV OFFICERS Section 1. Chairman of the Board. tee 4. one or more Assistant Safe Deposit Officers. None of the officers. with the excep- tion of the Chairman of the Board and the President. 2. and such other officers and agents as may be determined by the Board of Directors. a Trust Officer. All officers. or other competent authority under its direction. a President. from time to time. the President and the Vice-Presidents and Counsel. and approved in such manner as the Board of Sec. two or more Vice-Presidents. shall give such bond in such amounts. need be members of the Board of Directors. except the . who shall be elected by the Board. a Assistant Bond Officer. a Safe Deposit Officer. a Secretary. and the respective Vice-Presidents and assistants to the several officers shall have precedence in the order in which they are elected at the annual or other meetings. who shall be elected or appointed as the Board of Directors may. who shall continue in office for one year and until their successors shall be elected. prescribe. with such security. and one or more Counsel. one or more one or more Bond Officers. Assistant Trust Officers. Minutes of the meetings of the Commitshall be recorded in chronological on Trust Estates order in a book kept for that purpose in the Trust De- partment. and shall be submitted to each regular meeting of the Board of Directors. The officers shall be a Chairman of the Board.

The President Chairman of shall superintend and conduct the busi- ness of the Company. and in behalf of the Company to acknowledge and deliver the surety. the whether the President be absent or In the absence of the Chairman of the present. the President shall preside at all meetings of the Board of Directors and of the Executive Committee. and ficers. and shall have all the powers of President. Board. specialties and bonds to the United States. He is also authorized and empowered for the Company as principal or co-principal. shall hold their offices at the pleasure of the Board of Directors. The Chairman of the Board shall preside Sec. and to cause the seal of the company to be affixed thereto. Sec.MISSOURI \-\ LAWS all 417 Directors may. from time to time. at all meetings of the Board of Directors and of the Executive Committee. and all such instruments shall be signed and acknowledged by him on behalf of the Company. 3a. 3. unless excused by the Board from being a member thereof. direct. of- agents and employes. or to any corporation or individual. He shall. He shall be a member of all standing and other committees appointed by the Board of Directors. subject to the control of the Board and the Board of Directors. to execute same. when authorized by resolution of the Board of the Directors. affix the seal of the Company to any convey- ance of. except the Chairman of the Board. the President and Vice-Presidents. or contract for. or to any State or Municipality. or in relation to lands to which the Company is a party. or surety or co- any and all guarantees. seal to all The President is also authorized to affix said and execute on behalf of the Company any and deeds or other instruments relating to or connected .

subject to the control of the President and others having precedence in their order. 4. and per- . or as may be delegated to them by the President as and when authorized by said Board. 5. Sec. shall have and exercise all the rights. and the signature and acknowledgment of the Vice-Presidents to all official acts of the Company shall be valid and sufficient. prescribe. and make report thereof to the Board of Directors as often as required. powers and duties of the President. shall receive and take care of all moneys. and they shall perform such other duties and exercise such other powers as the Board of Directors may. Sec. from time to time.41S TRUST COMPANY LAW all with any and trusts accepted by the Company. acknowledgments of satisfaction of mortgages and judgments. The Secretary. keep full and complete accounts of all receipts and disbursements. depositing the same as the Board of Directors may direct. prescribe. and to dismiss any of the subordinate employes when he shall deem proper. releases. also any and all contracts. He shall have power departments until of heads officers or any suspend to the Board can be convened. and shall perform such other duties and exercise such other powers as the Board of Directors may. securities and evidences of indebtedness belonging to the Company. but subject to the control of the President and others having precedence in their order. certificates of trust. or other instruments issued by the its Company in the transaction of business. from time to time. He is also authorized to transfer to the parties lawfully entitled thereto any stocks which may stand in the name of the Company on the books of such other company. whether the President be absent or present. The several Vice-Presidents.

all perof conduct the carefully observe be his duty to sons employed by the Company and to report to the Company during President all such instances of neglect or unfitness as may come knowledge. hills of exchange and certificates of deposit. shall have authority to sign checks. and in the actual performance of his duties. powers and duties of the Secretary. papers and records of the to see pany. 8. 7. subject to the control . seal of the Company. shall perforin such other duties perto his tinent to his office. 6. affixed to I >i G and at each monthly meeting of the Board of Directors statement of the affairs shall furnish a correct general of the It shall the preceding month. Sec. and sign other papers in the routine business of the SEC. have general control >mand custody of the books. shall assist the Secretary and shall perform such duties as may be assigned to them by the Sec retary or other officers of the Company. drafts. The Secretary shall have custody of tinCompany. respectively. endorse checks or drafts payable to the Company. The Assistant Secretaries. subject to the control of the Secretary and others having precedence in their order. as they may require. Board of Directors and Executive G >mmittee. and attest the same when lawfully any instrument. Hoard of Directors and Executive Committee. whether the Secretary he absent or present. The Trust Officer.MISSOURI BY-LAWS 419 He form such other duties as the Board may direct. He shall daily examine. and under the direction oi the President. take charge of and the deposit of the cash in the respective departments. Sec. shall have and exercise all the rights. He shall attend and keep the minutes of all meetings of stockholders. give notice of all rectors and stockholders' meetings.

such checks to be countersigned by one of the Assistant Trust Officers. powers and duties of the Trust Officer. a Vice-President. and may in any of the business of have charge of all the securities and funds held in trust by the Company. He may countersign checks is of principals on bonds where this Company surety. at the end of each day. the control of the Trust Officer and others having precedence in their order. 9. agreements.420 TRUST COMPANY LAW of the President and others having precedence in their order. shall have and exercise all the rights. affidavits represent the Company shall said department. The Assistant Trust Officers. and entirely apart from the assets of the Company. whether the Trust Officer be absent or present. Pie shall. Sec. or by the President. subject to the control of the President and others having precedence in their bond department. and may perform such other duties and exercise such other powers as may be delegated to him by the President or a Vice-President of the Company. He shall have authority to make such receipts. subject to Sec. The Bond Officer. shall have charge of the trust department. He shall have authority to sign checks against trust balances. and may represent the Company in any of the business of said department. and shall keep the securities and accounts of each trust separate and apart from those of every other trust. acorder. shall have charge of the . He and settlements as may be trust requisite to be made in the department. 10. and in the actual performance of his duties. shall assist the Trust Officer and shall perform such duties as may be assigned to them by the Trust Officer or other officers of the Company. Secretary or an Assistant Secretary of the Company.

all the powers and duties of the Bond whether Bond Officer he absent or present and in the actual performance of his duties. The Real Estate Officer. shall assist the Real Estate Officer and shall perform such duties as may be assigned to them by the Real Estate Officer or other officers of the Company. in their order. whether the Real Estate Officer be absent or present and in the actual performance of his duties. The Assistant Real Instate Officers. subject to the 'resident in their order. Sec. 12. shall assist the Bond Officer and shall perform such ditties as may be assigned to them by the Bond Officer or other officers of the Comthe pany. 10a. and also for all securities The Assistant Bund Officers. sub- ject to the control of the Real Kstate Officer and others having precedence in their order. Sec. have and exercise Officer. Sec. and may represent the Company in any of the business of the safe deposit department.MISSOURI BY-LAWS 421 count to the proper department for the receipts and dis- bursements of handled. 11a. He . shall and others having precedence have charge of the safe deposit and storage vaults. He shall promptly deposit in the financial department any funds received in the control of the President in their order. shall course of business. shall have and exercise all the rights. subject to the and others having precedence have charge of the real estate department and max represent the Company in any of the business of said department. subject to the Bond Officer and others having preceshall dence rights. Sec. the control of his department. powers and duties of the Real Estate Officer. 11. control of the The Safe Deposit 1 Officer.

13. Until stock shall be transferred as pro- .precedence in their order. concerning the affairs of the Company when by them respectively requested. with the corporate seal attached. President and Secretary. or by 1. shall appear for the Com- pany in all suits and proceedings to which it is a party. is transferred. charge of its legal business. and attested by the Secretary. and when the stock certificates issued. The Assistant Safe Deposit subject to the control of the Safe Deposit Officer and others having. Executive Committee. shall assist the Safe Deposit Officer and shall perform such duties as may be assigned to them by the Safe Deposit Officer or other officers of the Company. and shall be transferable only on the books of the Company in person or by attorneys duly authorized according to law. The by Capital Stock of this certificates signed Company shall be represented by the Presi- some other executive officer of the Company. when directed by the Board of Directors. ARTICLE V STOCK Section dent. 12a. in the financial department any Officers. and shall advise the Board of Directors.422 shall TRUST COMPANY LAW promptly deposit Sec. which fact shall be stated on the face of the certificate. powers and duties of the Safe Deposit Officer whether the Safe Deposit Officer be absent or present and in the actual performance of his duties. 2. the certificate thereof shall be returned to the Company and cancelled and new Sec. funds received in the course of business. shall have and exercise all the rights. The Counsel of the Company shall have Sec.

4. Every certificate of its stock issued by this Sec. except the person to whom the same was issued. with security. the amount or percentage on the shares of stock represented thereby. to be approved by the President and Secretary or by the Executive Committee or by the Board of Directors. 3. he shall fully state in writing the grounds of such application. Sec. a to replace the old one. in case of executor. Missouri. except as provided by law administrator. Louis. Sec. and no person shall receive payment of dividends except those in whose names said stock stood on the books of the company on the date the transfer books shall be so closed. and elsewhere. and shall give four weeks notice of such application by advertising the same twice a week one or more of the daily newspapers published in the City if of St.MISSOURI BY-LAWS 423 vidcd in Section og-nized by this 1 of this article. no person shall be rec as the owner <>i said stock. and if no adverse claimant to said stock appear within ten days after the last publication of such notice. All amounts unpaid on each share of stock subscribed for or for . and in whose name the same stands on the books of the Com Company pany. and a bond of indemnity in double the value of said Company. stock be given to the Company shall state. 5. either on its face or by endorseactually paid ment thereon. new certificate may be issued provided due proof of such publication of said notice be deposited with the Company. guardian or trustee. and for ten days immediately preceding the date of payment of a dividend. The transfer books shall be closed ten days previous to each annual election of the Directors. In case a stockholder shall apply for a reof the capital stock of the newal of a lost certificate G >min pany. the officers of the directed by Company.

The fiscal year of this Company shall end on the thirty. properly directed to such stockholder at the postoffice nearest his usual place of residence. nor be made payable within any shorter period than five days from the date of mailing the notice of such assessments. 424 TRUST COMrANY LAW certificate which a has been issued by this Company shall be subject to call by resolution of the Board of Directors making assessments thereon and therefor. the Board of Directors may forfeit the stock of any such delinquent stockholder.first (31st) day of December in each . ARTICLE VI MISCELLANEOUS Section 1. in the City of St. which assessments shall not be greater than twenty-five nor less than five per centum of the full face value of the stock at any one time. and all previous pay- ments made thereon to the use of the Company as prescribed by law. or by depositing the same in the postofnce at the City of St. Missouri. postage prepaid. which shall be not less than sixty-one days after the date of said notice. and when the same is payable and if such amount be not paid at the time and place required by said assessment resolution and the notice thereof. and that if he fails to make such payment at said time and place. the Louis. on a day to be specified in said notice. Before any stock shall be so forfeited Board of Directors shall cause notice in writing to be served on such delinquent stockholder personally. Louis.. at the office of the Company. or such part thereof as remains unpaid. his stock and all previous payments thereon will be forfeited for the use of the Company. which notice shall state that he to is required make payment of the amount specified in such assess- ment resolution. Such resolution shall specify the amount of the assessment.

or of any of customers. 4. or under its company or hank. and when invested shall be invested in the name of the Company as Sec. having upon face in circular form the words com- . shall be kept in the such trustee. 2. Sec. a copy of which shall he submitted to the stockholders at the annual meeting. No its Director. There shall be semi-annual examinations Sec. accounts and securities of the company to be made by a committee of three persons. deposited in any other trust Company. who shall be stockholders of the Company. and all securities trusts shall be kept separate and accounts of such from those of the Company.MISSOURI BY-LAWS 425 shall be the year. who shall report the results of such examination to the Board at its next regular meeting. that is not of a public nature. or duly required by legal authority. officer or employe shall be allowed to disclose any of the business of the Company. except the necessary information to customers concerning their lar business. The its seal of the Company inches shall he a cir- cular disk one and seven-eighths in diameter. All trust funds in the hands of the pany. 3. to be appointed by the Board of Directors for that purpose. Comname of the Company as trustee for the trust estate. 6. 5. All money of the charge. and apart from those of every other trust. and at the close of each fiscal year it duty of the Board of Directors to cause a complete and accurate statement of the financial condition of the Company to he made forthwith from the books thereof. until invested. own particu- Sec. of all the books. shall be deposited therein to the credit of the Company by its corporate name. Sec.

at any annual meeting of the stockholders. Louis. and with the word center of the face.426 TRUST COMPANY LAW posing the corporate name of the Company. in for the transaction of business daily. m. 1 ''Seal" in a straight line in the Sec. Sec. Missouri. provided the notice calling said shall specify that a proposition to will be voted meeting majority at change the affirmative By-Laws upon thereat. 7. any meeting . The office of the Company shall be open from ten (10) o'clock on Sundays a. or other By-Laws substituted therefor in whole or in part. except . or circumstances shall render the same proper. 8. and the words "St. and legal holidays but the Board of Directors may." and the date of incorporation in circular form within the circle formed by the name. or close the office enwhenever the interests of the Company will be the best subserved thereby. thirds of all without previous notice. to three (3) o'clock p. repealed. An of the stock represented in shall be necessary to person or by proxy adopt such change. altered or changed. provided twothe stock of the Company then outstanding person or by proxy at such meeting. These By-Laws may be added to. m. tirely change said hours. its discretion. or at any annual or special meeting of the stockholders at which a majority of all the stock shall be represented shall be present in in person or by proxy.

the Board of Directors of the Cleveland Trust Company agrees to accept of such gifts. all property so held to be known as constituting The Cleveland Foundation. to tific research.Resolution Creating the Foundation Adopted by the Board of Directors of the Cleveland Trust Company. . for care of the sick.greater uniformity of purpose. devised and be- queathed for charitable purposes. charitable and educait shall be available for assisting provided. unless principal is distributed as herein- after in any way the Without charitable purposes for which such income may be used. 1914 a view to securing. and to be administered. powers and duties of administration in the management and control of property given. From the time the donor or testator as a single trust. and for such other charitable purposes imphysical and moral will best make for the mental. limiting tional institutions whether supported by private donations or public taxation. such income. provides that income shall be available for use of such Foundation. purposes and with the powers and duties hereinafter set forth. managed and dealt with. save as hereinafter provided. less proper charges and expenses. for promoting education. January With 2. shall be annually devoted perpetually to charitable purposes. aged or improve living conditions or to provide recreation for as all classes. devises and bequests as Trustee for the uses. scienhelpless.



provement of the inhabitants of the City of Cleveland as


or hereafter constituted, regardless of race, color

or creed, according to the discretion of a majority in number of a committee to be constituted as hereinafter

provided, or in event of the failure of two of the public officials empowered to appoint members upon the committee to

make such appointments within

thirty days

from the time they are requested in writing by the Trustee to do so, or in event of the unwillingness, failure or inability of a majority of the members to serve if appointed, or of the

power to disburse income by said committee being adjudged by a court of last resort to be
then according to the unfettered discretion of a majority of the members of the Board of Directors of

the Cleveland Trust

Company, such committee, or the

directors of the Cleveland Trust


in event the

power shall lodge in them, to use or distribute the net income when and as above provided, in such manner as
accomplish the purpose expressed, according to their absolute discretion; provided that, if contributors to the Foundation, in the instruments creating
will best

their trusts, indicate their desire:


to time

when and purposes

for which prin-

cipal contributed

by them

be distributed.
shall be


to purposes for

which their income

used, either for a definite or indefinite period of time. That the power to distribute principal or income 3.
shall be vested in the

Committee constituted as herein-

after provided, with the exception only that the


provided to be selected by the Judge of the United States District Court shall be appointed by the Board of Directors of the Cleveland Trust

The Trustee


Company. respect and be governed by



wishes as so expressed, but only


in so far as the purpi

indicated shall seem to the Trustee, under conditions as


hereafter exist, wise and most widely bene-

absolute discretion being vested in a majority of

the then


of the

Board of Directors of the

Cleveland Trust


determine with respect

Principal or interest diverted under this power
the general purpose of the

to other than the specific purposes indicated shall

used and distributed



The committee

to distribute said


shall be

residents of Cleveland,




interested in wel-

fare work, possessing a knowledge of the civic, educational,


and moral needs of the community,

preferably but one, and in no event to exceed two
bers of said committee to belong to the
sect or






those holding or seeking political

office to

be disqualified from serving.

Said committee

shall be selected as follows


by the directors of the Cleveland Trust Comto








One by
One by
of estates in


or chief executive officer of the

City of Cleveland.
the senior or presiding Judge of the Court
for the time being having jurisdiction of the settlement

Cuyahoga County.
the senior or presiding Judge of the United

One by

States District Court for the Northern District of Ohio,

or of the Court that


hereafter exercise the juris-

diction of said Court in

Cuyahoga County.

In event of any question arising as to the
herein authorized to


said appointments, the deci-


sion of the


Board of Directors of the Cleveland Trust Company shall be final and conclusive with respect
appointments to be for a term of five years, except the appointments first made, which shall be as




One member by the Board of Directors of the Cleveland Trust Company for one year. One member by the Judge of the United States District

Court for the Northern District of Ohio for two


One member by
Cuyahoga County
for four years.

the Judge of the Probate Court of

for three years.

One member by



of the City of Cleveland of the Cleve-

One member by the Board of Directors land Trust Company for five years.

Vacancies by expiration, death, resignation or refusal to serve to be filled for the unexpired term by


original appointment, in event of the

failure for thirty days after receipt of written notice from the Trustee so to do, then by the Directors of the

Cleveland Trust Company; the expenses of the committee, including compensation, to be fixed by the Trustee to a secretary, who shall be appointed by and hold office subject to the will of the Trustee, shall be paid
out of the income, but the


shall serve


annually organize by the election of a chairman and shall keep complete records of their proceedings, receipts and disbursements, copies




with the Trustee on or before the 20th day of January in each year; disbursements shall be made by the Trustee on the written orders of a majority of the committee given at regularly called meetof which shall be



Failure of the committee for twelve months to

disbursement orders with the Trustee shall empower the Board of Directors of the Cleveland Trust Company to disburse income then available for distribution.

After the entire income of any

trust constituting the

all or Foundation is any portion of the property belonging to such trust may be listed for taxation, regardless of any statute exempt

available for charitable purposes,



or any part thereof by reason of



to charitable purposes, if

a majority of the

Board of

Directors of the Cleveland Trust


shall so di-

The receipts and disbursements of the committee rect. as well as of the Trustee shall be annually audited by
an independent Auditor, and there shall be published annually in the two newspapers published in the City of Cleveland reputed to have the largest circulation therein, a certified statement by such Auditor showing in detail
the investments held in each separate trust constituting

the Foundation, the

amount of income received during

the preceding year, the purpose for which the income

has been used, and a classified statement of the expenses of the committee and the Trustee. Failure to make such publication shall authorize any court of competent jurisdiction to appoint another trustee in event the court shall
find that neglect to

make such



due to gross

carelessness or willful neglect of the Trustee.

Successor trustees, however, or for whatever reaall powers and disin all respects like with duties charged be and cretions as herein conferred upon the Cleveland Trust Company. With the approval of two-thirds of the entire Board

son appointed or created, shall have

of Directors of the Cleveland Trust

Company, given



called specifically for that purpose, all or




part of the principal constituting the trust estate


be used for any purpose within the scope of the Foundation,

which may have the approval of four members of said committee, providing' that not to exceed twenty

(20) per cent of the entire amount held as principal shall be disbursed during a period of five consecutive years.
In event a court of last resort shall ever adjudge that
the provisions requiring the approval of said committee
to disbursement of principal, or that the

power conis

ferred on said committee to disburse income

shall be


to distribute principal

and income

vested exclusively in the Board of Directors of the

Cleveland Trust Company, and thereafter said committee shall act in

an advisory capacity only.


further assure the carrying out of the purposes
provisions are

of the Foundation, each and every of

to be regarded and construed as independent of every

other provision.

In event a court of last resort shall

adjudge that any of the terms, conditions or provisions of the Foundation are invalid, such adjudication shall in no wise affect the validity of the remaining provisions, and the Directors of the Cleveland Trust Company, by a two-thirds vote of the entire Board at a meeting called
specially for that purpose, are


to direct that

the administration of the trust be proceeded with in such


most nearly conform in their judgment to the charitable intention and purposes of the Foundation, due consideration being given to changed conditions and varying circumstances.
as will

Either the attorney-general of the State of Ohio,
or the law officer of the City of Cleveland, shall have the
right to institute appropriate proceedings in

any court

of competent jurisdiction to restrain, correct or recover



any maladministration of the trust estate 1>> Trustee or the Committee, and shall at all reasonable times have the right to inspect the books, vouchers and records oi the Trustee and the Committee in any way pertaining
to the Foundation.

administering the property constituting such Foundation, unless otherwise specifically provided in the

instrument creating the trust, the Trustee shall have power to sell, lease, transfer or exchange all or any part of said property at such prices and upon such terms and
conditions and in such




may deem

best; to

execute and deliver any proxies, powers of attorney or agreements that it may deem necessary or proper; to
tate as

and re-invest

in such loans, securities or real es-

may deem

suitable for the investment of trust

funds, irrespective of any statutes or rules or practices of Chancery Courts now or hereafter in force limiting
the investments of trust companies or trustees generally; to determine whether money or property coming
into its possession shall be treated as principal or


and charge or apportion any expenses or losses to principal or income according as it may deem just and equitable; to select and employ in and about the execution of the trust, suitable agents and attorneys and to pay their reasonable compensation and expenses; the Trustee in no event to be held liable for any neglect, omission or

wrongdoing of such agents or attorneys, provided


sonable care shall have been exercised The Trustee, save for its own gross neglect or willful
default, shall not be liable for

in their selection.


loss or


your will or trust agreement provides for payment of income to family and relatives during life, the



insertion of the following will result in a contribution to

the Cleveland Foundation with the
entire plan


effect as if the

were incorporated:
the termination of the trusts hereinbefore

ex] tressed,

income derived trust estate, with its accumulations as aforesaid, shall be annually expended or appropriated, perpetually, until the principal may have been disbursed, for the charitable uses and purposes set forth in a Resolution adopted by the Board of Directors of the Cleveland Trust Company on the second day of January, 1914,
direct that the entire net

from the

providing for a community charitable trust, designated
in said Resolution as

The Cleveland Foundation.


further direct that the trust estate, both principal and

income, shall thereafter vest in the Cleveland Trust

Company and
disbursed in

be managed, controlled, administered and
respects as provided in said Resolution,


reference to which

hereby made, as fully and with


effect as if herein set forth at length."

Resolution Adopted by the Board of Directors of the Security Trust & Savings Bank, Los Angeles,





It is

desirous of securing greater

ciency of administration in the management, disposition

and control of the income and principal of property given, devised and bequeathed for charitable purposes and uses, The Board of Directors of the Security Trust and Savings Bank, hereinafter called Trustee, on behalf of
said Trustee, does hereby agree that the Trustee shall
accept, take

and hold as Trustee,


property transit

ferred, given, conveyed, devised or bequeathed to


charitable uses and purposes, and with the powers and

duties hereinafter set forth,




property so taken and

held to constitute and be known as the Los Angel] Community Foundation, hereinafter called "Community Foundation," and to be administered, managed

and disposed of, either or both as to principal and income, as a whole and as a single trust, except as herein
after mentioned; provided, however, that said Trustee

reserves the absolute right to refuse to accept or take

any property so transferred, given, conveyed, devised or bequeathed to it, which in its discretion will not be properly available for or best serve the purposes of this trust.

Nothing, however, in this instrument contained shall be construed to limit the powers of the Trustee to take and accept property and to hold and to exercise the powers herein described with reference to any property that


be transferred or set apart to said Community Foundation, by the Security Trust and Savings Bank from other sources, or by persons other than the original

donor or trustor of any other trust. From and after the time when income from such Community Foundation shall be available for the use of such Community Foundation, such income, less proper charges and expenses,

and devoted annually (or at such shorter intervals as the Trustee may see fit), and perpetually, to uses and purposes strictly charitable or eleemosynary
shall be applied in

nature according to the laws of the State of California
force at the time, unless and until the whole or a

part of the principal
strictly charitable or

distributed for uses and purposes


nature according

to the laws of the State of California in force at the time
in the


manner hereinafter provided. Without limiting any manner the strictly charitable or eleemosynar

purposes for which such income


be used and ap-





shall be available to the

strictly charitable or

Trustee for assisting eleemosynary institutions whether

supported by private donations or public taxation, or

and whether situated within or without the City of Los Angeles, for bringing the hearts and minds of persons under the influence of education, for relieving
their bodies of disease, suffering or constraint, for as-

sisting to establish themselves for life, for erecting or

maintaining public buildings or works or in other ways (strictly charitable or eleemosynary) lessening the burdens or making better the condition of the general public
or some class or classes thereof; provided that the class
or classes so benefited shall be

some portion or


of the

people of the City of Los Angeles, or the County of Los

Angeles as


constituted, or of the municipalities

within said county or any or

of them.

Said income


be so used, applied and availed of

by the Trustee for the charitable uses and purposes aforesaid according to the discretion and decision of a majority in number of an advisory committee to be constituted as hereinafter provided, or in the event that for

any reason said advisory committee should cease
herein provided of a majority in
to disburse said

to exist,

or the directions for the application of said income as

number of


mittee, shall not be obtained, or in the event of the


adjudged by a


income by said advisory committee being judgment of a court of competent

jurisdiction of the State of California to be illegal, then

according to the uncontrolled and absolute discretion of the Trustee, to be exercised by the Trustee through motion, vote,

order or resolution of a majority of



of Directors from time to time, such advisory committee or said Trustee, in the event the


shall lodge in





them or it, to use, apply or dispose of the net income when and as above provided, in such manner as will besl accomplish the uses and purposes herein expressed according to their or its absolute and sole discretion; pro
vided, however, that

the contributors to the



in the

instruments creating their trusts



their gifts, devises or bequests thereto, shall

indicate their desire

when, the charitable purposes for which, and amount of, the principal contributed by them shall be applied or distributed; or/and As to the charitable purposes and period of (b)


to time

time for which the income shall be applied or distributed



That the power

to apply

and distribute prin-

cipal or income, or both, shall be vested in the advisory

committee constituted as herein provided. The Trustee shall respect and be governed by the
wishes as so expressed, but only in so far as the charitable purposes indicated shall seem to the Trustee under
conditions as they


hereafter exist from time to time,

wise and most widely beneficial; sole, absolute and uncontrolled discretion being hereby vested in the Trustee to determine with respect thereto, such discretion to be
exercised by the Trustee through motion, vote, order or resolution of a majority of its Board of Directors from

time to time.



and income diverted under

this power to other than the specific purposes indicated in the instrument or instruments of conveyance executed

by said contributors,

always be used and distributed for the charitable objects and purposes of the Community Foundation as herein indicated. The advisory committee to disburse said income




shall at all times be residents of the

County of Los An-




interested in the public welfare,

possessing a knowledge of the charitable needs of the people of said County as now constituted, or/and of the
municipalities within



shall at

its borders, and not more than two any one time belong to the same re-

ligious sect or denomination; those
political office to

members holding



be ipso facto disqualified from serving. members of said advisory committee shall be

selected by the

Board of Directors of
shall be selected

said Security Trust

and Savings Bank, as follows

Two members
The remaining

from amongst the
shall be selected at

directors of said Board;



from the residents of said County of Los Angeles.
of office of each

The term


shall be for five

years, except the appointments first made, which shall

be for one, two, three, four and five years; the term of each member to be determined amongst themselves by

such manner as they may mutually agree. All vacancies caused by disqualification, death, resignation, expiration of term, or refusal to serve, to be filled by the
lot in

remaining members of said advisory committee, provided that at all times two of said members shall be directors of said Trustee. In the event of the failure by
fill vacancies amongst of said Trustee shall Directors of Board themselves, the be, and it is hereby, vested with the power to do so. The members of said advisory committee shall serve without

said committee for thirty days to

compensation, but


necessary expenses incurred by

performance of their duties, and which may be approved by the Trustee, including the compensation


in the

of a secretary


shall be appointed by, hold office sub-

ject to the will of,


and whose compensation shall be fixed by the Trustee, shall be paid out of the income derived or received from the trust estate. Said committee shall annually organize and elect from amongst themselves
they deem advisable, who shall serve without compensation, and shall keep complete records of their proceedings, receipts and disbursements, copies


officers as

of which shall be

with the Trustee on or before the All disbursements 15th day of January in each year. under this trust shall be made by the Trustee on the written orders of a majority of the advisory committee,

given at regularly called meetings thereof. Failure of the advisory committee to file disbursement orders with the Trustee shall authorize and em-

power the Trustee

income then available for distribution for any charitable purposes mentioned in this trust, said authority and power to be exercised by
to disburse the

the Trustee through motion, vote, order or resolution of a majority of its Board of Directors from time to time.

A condensed statement of the receipts and disbursements under
such form as the Trustee shall select, shall be by it published annually in one or more newspapers published in the City of Los Angeles.
this trust, in


the approval of two-thirds of the entire


of Directors of the Trustee, given at a meeting called specifically for that purpose, or at any regular meeting
after notice in writing given at least live days prior thereto, all or any part of the principal constituting the
trust estate

be by the Trustee applied toward, and used for, any purpose within the scope of this trust which may have the approval of four of the members of


said advisory committee; provided, however, that in no case shall more than 20 per cent of the entire amount

and vote of twothirds of the members of said Board as to disbursement of principal. laws or judicial decisions shall advisable or necessary to abandon or or plan of administration of this trust. vote. and in the event that a court of competent jurisdiction shall finally determine that any of the terms. to be invalid. and thereafter said advisory committee shall act in an advisory capacity only. order or resolution of a majority of its Board of Directors from time to time. and as may be modified by any such judicial determination. such determination shall in nowise affect or impair the validity of the remaining provisions. as to disbursement of income.440 TRUST COMPANY LAW of the principal of the trust estate be disbursed during a period of any one year. cir- cumstances. its To of the further assure the carrying out of the purpose Community Foundation. In the event that a court of competent jurisdiction of the State of California shall ever finally adjudge the provisions requiring the approval or conferring the power on said advisory committee in disbursing either or both the principal or income from the trust estate. conditions or provisions hereof are invalid. such power and discretion to be exercised by the Trustee through motion. In the event that future or changed conditions. and this trust shall be carried out by the said Trustee so as to conform as nearly to the purpose hereof as shall be possible. make it change the mode so as to make the same conform to such changed conditions. each and every of provisions shall be regarded and construed as independent of every other provision. the power to disburse such principal and income shall thereafter be vested solely and exclusively in the Trustee. circum- .

. or both. as above authorized. Such advisory . securities and investments of the Trustee in any way pertaining. the Trustee shall he. vested with the power to appoint any reputable corporation in the City of Los Angeles. shall at all reasonable times The advisory committee have the right to inspect the books. generally and specifically. who shall have all powers and discretions. shall have the right to institute proceedings in any court of competent jurisdiction to restrain. records. and be herein con- charged with Trustee six like duties in all respects as ferred upon the Security Trust and Savings Bank. In the event that said Trustee shall be removed from its office as Trustee hereunder by any court of com- petent jurisdiction in a proceeding instituted for that purpose by said advisory committee. be. vouchers.to the Community Foundation and the costs. by writ- ten notice thereof. In such case the advisory committee shall and it is hereby. authorized and to administer this trust em powered and so carry out the charitable purposes of the such manner as it shall Community Foundation in deem advisable. or of the abuse of the powers of the Trustee. correct or recover for maladministration of the trust estate by the Trustee. committee. absolute and uncontrolled discretion being herein. delivered to the advisory committee months prior when such resignation shall take effect. The may at any time resign from to the time this trust. as well as the attorney-general of the state.vested in said Trustee for this purpose and end. of the trust estate. laws or decisions. such court shall appoint a successor of said Trustee.((IMMUNITY TRUSTS stances. charges and expenses of any such inspection. is 441 and it hereby. and of any necessary audit shall be chargeable against the income or principal.

for the purpose of continuing in whole. the Trustee shall be. its any manner. pursuant to the then existing law applicable thereto. for whatever reason appointed or created. all vested with which shall be and charged with the same duties hereunder as are described herein with reference to said Security Trust and Savings Bank. mortgage. or the organization of such poration. authorized and legally qualified to execute the powers and discretions as the successor of this trust. powers. or in part. and corporate existence shall be extended. shall have all powers and discretions and be charged with like duties in all respects as herein declared by Security Trust and Savings Bank. and it is hereby specifically and generally authorized and empowered (a) To sell. the busi- ness thereof. without the necessity of any further act or conveyance. or expire by limitation of time. and instead of such expiring or retiring corporation. discretions and duties of such trustee. transfer or exchange . lease.: 442 TRUST COMPANY LAW is which trusts. In administering any property constituting such Community Foundation. and shall be vested and charged with all and the same rights. in place. estates. then immediately upon the extension of its corporate existence. titles. interests. And if at any time hereafter. it new cor- shall ipso facto be and become. unless otherwise specifically provided in the particular instrument transferring the particular property to this trust. the corporate charter of the Security Trust and Savings in Bank shall terminate. or a tion new corpora- empowered to act as Trustee shall be organized. Successor trustees. the Trustee of the trust herein created. during the continu- ance of the trust herein created. as herein set out.

and have a first and prior lien upon all of the income (b) To advance and principal of the trust estate. properties or securities and upon such terms and To invest. and to pay their reason(f) To select and employ in . loan conditions as it may deem best without restriction to the character or classes of loans or investments permitted to trust companies To determine whether money or property (e) into its coming possession shall be treated as principal or income. and reloan the whole or any portion of the trust estate in such. out of either or both said income or said principal for all sums so loaned or advanced. deem or loan money. reinvest. . any and all ways. and any equitable title it may take or receive to the income or principal of the trust estate by reason of any such advance or loan shall remain separate and shall not become merged with the legal title which it shall hold as Trustee hereunder. ('IMMUNITY TRUSTS all 443 such terms and conditions and or any part of the trust estate at such prices and upon in such manner as it may best. agents and attorneys which it may deem necessary. upon the approval of the advisory committee. deeds and may agreements and other instruments that it deem necessary or proper in the administration of (d) this trust. and charge or apportion any expenses or losses to principal or income as it may deem just and equitable and about the execution of this trust all employes.. (c) To all execute and deliver any proxies. execute and deliver any contracts. for the purpose of this trust. or to make. with the right to fully repay and reimburse itself. powers of attorneys.

shall not be liable or responsible for any loss damage resulting to the trust estate. If a direct devise or bequest is by Will for the general purpose of the Foundation contemplated. or both. cised reasonable care in their selection. To do all and any other acts and things not (g) hereinbefore specified which it may deem advisable. ion of counsel shall be a full protection FORMS OF BEQUEST First. : 444 TRUST COMPANY LAW and expenses the trustee in no event to be liable for any neglect. in good faith and in accordance with such opinion. for all outlays and expenditures made by it in the proper performance of its powers. agents or attorneys. omission or wrong-doing of such employes. discretions and duties. if it shall have exerable compensation . use the following form . a reasonable compensation for acting as Trustee (i) To protect the trust and all property of the trust and the Trustee's (j) interest thereto from attack of trust estate or any kind To reimburse itself from the from the gross income received or derived therefrom.. or which changed and varying conditions. to the end that the purposes of the Community Foundation may be stances may consummated (h) To take and retain annually from the gross income received or derived from the trust estate during the life of the trust. The Trustee may advise with counsel and . The or Trustee. laws or circumrender necessary or advisable. save for its own gross neglect or will- ful default. . the opin- and justification to the Trustee for anything suffered or done by it. .

with the same force and effect as if herein set forth at length. designated in said resolution as Los Angeles Community Foundation. in fee simple. to the Security form and bequeath. devise 445 in fee simple. 1915. recorded in Book 242. and bequeath.: COMMUNITY TRUSTS "I hereby give. of Los Angeles. produties. with the same force and effect as if herein set forth It is my suggestion." Second. of Miscellaneous Records of Los Angeles County. of Los Angeles. in trust for the charitable uses and purposes and with the powers and and income. share or description of property intended to be given). of Miscellaneous Records of Los Angeles County. or description of property intended to be given). Page 182. . to the Security Trust and Savings Bank. recorded in Book 242. both as to principal 1 viding for a community charitable trust. Trust and Savings Bank. If a direct devise or bequest by Will. which said resolution is incorporated herein by reference. however (without any at length. in trust for the charitable uses and purposes and with the powers and and income. a corporation. share. use the following "I hereby give. is with a request for specific application of the income desired. produties. as are fully diset forth in a Resolution adopted by the Board of the on Bank rectors of said Security Trust and Savings first day of June. both as to principal viding for a community charitable trust. on the first day of June. as are fully set forth in a Resolution adopted by the Board of Directors of said Security Trust and Savings Bank. 1915. designated in said resolution as Los Angeles Community Foundation. which said resolution is incorporated herein by reference. devise. California (here state the sum. Page 182. a corporation. California (here state the sum.

If the devise or bequest is to go to the Foundation. or controlling. Page 182. that the said net income shall be applied towards the (maintenance of a bed for tubercular per- X Sanatorium of Los Angeles. a corporation. to be thereafter expended or appropriated pursuant to said Resolution. California. on the first day of June. said Trustee)." . with the same force and effect as if herein set forth at length. 1915. use the fol- lowing form: "The remainder in fee simple of the property hereinbefore devised or bequeathed for life. providing for a community charitable trust. I hereby give. recorded in Book 242. at which time sons in the or for — (one-half of the principal sum herein devised) shall be expended by said Trustee towards the (erection of a fountain in Y Park in said City of Los Angeles for the use of thirsty animals and birds frequenting said park ) and the remaining oneor any other object desired half of the principal. of Los Angeles. designated in said resolution as Los Angeles Community Foundation. of Miscellaneous Records of Los Angeles County. in trust for the charitable uses and purposes and with the powers and duties both as to principal and income as are fully set forth in a Resolution adopted by the Board of Directors of said Security Trust and Savings Bank. after the termination of a prior life estate for the benefit of some designated person. devise and bequeath to the Security Trust and Savings Bank." Third. or any other time. which said Resolution is incorporated herein by reference.— 446 intention to TRUST COMPANY LAW make the same binding upon. California some other purpose desired )for a period of ten years after my demise. together with the net income there- — from. upon the termination of said life estate.

1915 Herbert D. 1915. hereinafter called the "Trustee. a corporation duly organized and existing under the laws of the Commonwealth of Massachusetts. It is desirable that the principal of any the fund devoted to charitable purposes be placed in . the I. by Boston Safe Deposit and Trust Company. held August 3. 1915. be and they hereby are authorized to execute and. Secretary. Heathfield. Deposit and Trust Safe Boston [Corporate Seal of Company. A true copy from the records. at a regular meeting of Boston Safe Deposit and Trust Company. September 7. 1915. to acknowledge and to record.: : COMMUNITY TRUSTS 447 Permanent Charity Fund Boston Safe Deposit and Trust Company." WITNESSETH THAT Whereas. either one or both. was passed That the President and the Treasurer.] AGREEMENT AND DECLARATION OF TRUST This agreement and declaration of trust made this seventh day of September. and filed with the records thereof. an Agreement and Declaration of Trust for charitable objects and purposes in substantially the form of that presented to this meeting. in the name and on behalf of this Company. Trustee September 7. Heathfield. Secretary of Boston Safe Deposit and Trust Company. a quorum being present. the exact form of such instrument shall be finally determined by the President and shall be that which following vote Voted: by his execution thereof he shall determine. hereby certify that. or Assistant Treasurer. Attest Herrert D.

Without in any way limiting the generality of the foregoing. shall be designated as the "Permanent Charity Fund. proxy. or other instrument relating to the same which it may deem necessary or advisable. whether such gifts be made by gift inter vivos or by devise or bequest or otherwise. transferee or other person dealing with the Trustee with regard to . the Trustee shall have the following powers To sell. at the same . acknowledge. contract. time. The Trustee agrees and declares that it will accept and hold gifts made to it as Trustee hereunder. and to execute. and no purchaser." The Trustee shall have full power and auFirst. conservatively and intelligently invested to the end that the principal shall remain unimpaired. 448 TRUST COMPANY LAW it safekeeping of a permanent trustee in order that may be safely. thority at all times to invest and reinvest the principal of this Fund in both realty and personalty and generally to manage. exchange or transfer any or all and any part or parts of the said principal upon such terms and conditions and in such manner and form as it may deem best. for the uses and purposes and subject to the powers and duties hereAll property so accepted and held inafter set forth. deliver and record any deed. and it is desirable that the income of such a fund be applied from time to time to charitable purposes which shall be most deserving of assistance at the time such income shall become available Now. while. care for and control the same with all powers necessary or convenient for such purposes. oftentimes not feasible to determine whether or not a charitable object may continue indefinitely to be worthy. a stable and reasonable income shall be produced and It is Whereas. power of attorney. therefore.: .

to mortgage any real estate at any time held by it hereunder. and also the power to establish and maintain. its possession shall be treated as and mode which the expenses incidental to or in connection with the execution of the trust ought to be borne as between principal and income. Upon entire the affirmative vote of three-fourths of the Board of Directors of the Trustees. to such an extent and upon such terms and conditions as three-fourths its of Board of Directors all shall deem best. stock. a sinking fund or sinking funds to provide for payment or reduction of any mortgage upon any real estate at any time held by it hereunder. deems best. security or other investment shall be dealt with as principal with a view to prevent the diminution of the trust. at a meeting specially called for the purpose. without the generality thereof being hereby restrained. whether and to what extent and in what manner any part of the actual income of such b< >nd. The Trustee may retain it or other security given to any property. and this power shall include. To lease any or all and any part or parts of the real estate at any time held by it hereunder upon such conditions and for such term or terms as it. in such manner and to such extent as it deems necessary or proper. To determine questions whether any to determine the money in or things coming into principal or income. the power to determine in case any investment shall at any time be at a premium in any bond or security for money or in any wasting investment so called.C0MM1 \\l\ l RUSTS 449 said principal shall see to the application of money or property paid to the Trustee. and to apportion the same between principal and income as it shall deem just and equitable. bond hereunder as >ng as it deems li .

hereinafter called the "Committee. and discretion herein given to it through a majority of its membership. including educational and charitable institutions. exercise all the powers. expenses and deductions. vided exercised reasonable care in their selection nor shall the Trustee be liable for any loss unless it shall happen through its own wilful default. color or creed. unless otherwise specifically provided. and to select and employ suitable agents and employes in and about the execution of the trust. and also reasonable compensation for its own services. each of whom shall be a resident of .450 TRUST COMPANY LAW advisable without being liable to any person for such retention. less proper charges. liable for The Trustee neglect or shall in no event be held any wrongdoing of such agents or employes pro." shall consist authority of seven members. Without in poses for which said income may be used. herein given to it through agents or employes appointed by it. it Second. and to pay their reasonable compensation and expenses. The Committee to select or determine the Third. Said Committee shall. public or private. The income of this Fund. and the relief of individual needs regardless of race. shall each year forever be applied to such charitable purposes as the committee hereinafter provided for shall in its own uncontrolled discretion mine. The Trustee is fully authorized to exercise the pow- ers and authority. whether incorporated or not. whether discretionary or otherwise. the said Committee may from time to time select or determine objects from time to time select or deterany way limiting the charitable pur- or purposes of benevolence or charity. objects and purposes to which the income shall be applied.

physical or moral needs of the community. One by the Attorney-General of the of Massachusetts or the law officer of the in whom may hereafter rest the supervision of charitable trusts in the Commonwealth Commonwealth Commonwealth.— COMMUNITY the TR1 451 Commonwealth or of Massachusetts. the decision of the Trustee shall be final and conclusive with respect thereto. preferably of bul one oi such needs. One by the senior or presiding judge of the Probate Court of Suffolk County or the court for the time being having jurisdiction of the settlement of estates for the judicial district in which the City of Boston shall lie. nor shall any person whose religious sect or denomination is the tee same as that of any two members of said Commitbe eligible to membership thereon. One by the senior or presiding judge of the United ' States District Court for the district of Massachusetts. If any question arises as to the official herein auth< »r ized to make appointments. men women interested in and preferably charitable work. and possi ing a knowledge of the civic. and in no event shall any person seeking or holding political office be a member of said Committee. Three by the Trustee preferably to be designated from its Board of Directors. Said seven mem: bers shall be chosen as follows One by the Chief Justice or the senior or presiding judge of the Municipal Court of the City of Boston or the court that may hereafter exercise the jurisdiction of said court in Boston. or of the court that may hereafter exercise the jurisdiction of said court in the judicial district in which the City of Boston shall lie. or as to the qualifications of If the persons appointed. any one . educational.

such appointment shall be made by the Trustee. which notice shall be conclusive as to the fact of such disqualification. One member by Vacancies be filled the Trustee. One member by the Chief Justice of the Municipal Court of the City of Boston. If any member of the Committee removes from the Commonwealth of Massachusetts. except that the appointments shall be made as follows: One member by the Attorney-General. or seeks or occupies political office. in the Committee caused by death. he shall thereby automatically be disqualified. three years. or fails for a period of six months to attend committee meetings. first by the Trustee. one year. The secretary of the Committee shall be appointed by and . three years. All appointments shall be for the term of five years and until the successor is chosen and qualified. One member by the senior or presiding judge of the United States District Court for the district of Massachusetts. and upon written notice from the Trustee to the proper appointing authority. In the event of failure to make such appointment within thirty days after receipt from the Trustee.— 452 TRUST COMPANY LAW or more of said officials fails to make appointments within thirty days after being notified in writing by the Trustee to do so. four years. then the Trustee shall be authorized to make such appointments. refusal or inability to serve or otherwise. resig- nation. five years. Two members One member by the senior or presiding judge of the Probate Court of Suffolk County. shall by the authority entitled to make the original appointment as aforesaid. of written notice of the vacancy. two years. a vacancy shall be created which shall be filled as above provided.

out any further act or conveyance as if it. to file Failure of the Committee for twelve months disbursement orders with the Trustee.COM M UNITY TRUSTS 453 hold office subject to ( the will of the Committee. except as made by the Trustee only and upon written orders signed by a majority of the Committee. complete records of its proceedings. . The Committee tion of a shall annually organize by the elec- chairman and such other officers as it desires and by the adoption of such rules governing it s proceed It shall keep ings as it deems necessary or desirable. and such written orders shall constitute full and complete Fourth. but the members of the Committee shall serve without compensation. make disbursements of income without the above-mentioned Should a successor trustee or trustees be for any reason whatever appointed during the continu- ance of the trust hereby created. copies of which shall be filed with the Trustee on or before the twentieth day of January in each year. and in that event to written orders. hereinafter provided. to the secretary as the Trustee shall shall be paid out of income. The expenses of the bmmittee. herein given the Trustee. him or them withhe or they had been the original trustee. Disbursements of income shall. Fifth. be authority to the Trustee for the disbursements therein called for. stating that said orders were authorized by votes passed at properly called meetings of the Committee. discretionary or otherwise. including Mich compensation fix. shall empower the Trustee to exercise the powers and duties herein given the Committee. and upon the appointment and acceptance of such successor trustee or trustees the trust fund shall vest in it. such trustee or trustees shall have all the powers and duties.

determine that. The Trustee may accept gifts as to which the donor has expressed a desire that the income thereof shall for a definite or indefinite time be used for particular charitable purposes. during such named period. In case the Trustee and the Committee . that if the Committee shall. such desires or wishes shall not. it is only. and if such gifts are accepted the Committee shall respect and be governed by the desires or wishes of the donor. and shall not prevent the application of the income. such directions shall be binding until the expiration of such lives or terms of years. by a vote of five-sevenths of its entire membership. be binding -upon the Committee. The Trustee may accept gifts subject to directions of the donor to for life pay the income to individuals or for term of years. that the provisions hereof requiring the approval of the Committee the powers and duties herein given the Committee shall thereupon be vested exclusively in the Trustee. during such named of the donor or that period. Seventh. for the period named in the vote or until further action of the Committee. and thereafter such gifts shall be held for the charitable objects and purposes herein set forth. Ninth. TRUST COMPANY LAW In case a court of last resort shall decree to the disbursement of income. by a majority Eighth. contrary to the spirit or intent of the desires or it is wishes unwise or impracticable to apply the income to the purposes indicated by the donor. however. and thereafter said Committee shall act in an advisory capacity and the written orders provided for in Article Fourth may be dispensed with. deem advisable. to such other charitable purposes as the tee Commit- may. provided. vote. are invalid. and if such gifts are ac- cepted.454 Sixth.

made or given by said corporation in accordance with a vote of the same fraction of its members. subject always to the expressed desires or wishes of any donor as provided in Article Seventh hereof. and such as relate to the Committee or its its members. made or given by a certain fraction by a majority vote of members except of the Committee. approval or consent shall be done. approval or consent of the Committee is required to be done. and the provisions relating to the qualifications and disqualifications of the members of the Committee shall apply to the act members of the corporation. although in conflict with the foregoing provisions hereof. and the . except that the following provisions. its Said corporation shall that where any act. and apply bers. such of the limitations and provisions hereof as relate to such corporation or members. tee its all and its members. such act. and Commonwealth the charter or by-laws of such corporation shall include. In general.— COMMUNITY TRUSTS 455 deem Committee may become incorporated as a charitable corporation under the laws of the it desirable the of Massachusetts for the purpose of administering the income of the Fund. by reference or otherwise. and of performing the duties and powers herein given to the Committee. to such corporation or its mem- The members all of said corporation shall be apfilled in pointed and vacancies shall be the same man- ner as provided for the members of the Committee. shall govern (1) The net income available for charitable objects and purposes shall annually be paid over by the Trustee to said corporation to be by it distributed to and among : the provisions hereof relating to the Commitmembers shall apply to said corporation and the charitable objects and purposes herein set forth.

the Trustee may upon written notice to remove any one or more of its members and appoint members of its own Board of Directors to said corporation fill the unexpired terms. if . the powers and duties of the Committee shall be vested in the Trustee. if any. (5) In case a court of last resort shall decree that the provisions hereof relating to the incorporation of the deemed if never inserted as and to be to be stricken herefrom herein. (6) The Trustee and the said corporation may. (2) The corporation may appoint such employes or agents as it deems necessary. that if the provisions hereof requiring the approval of the Committee to the manner be decreed to be invalid. powers and duties as fully as if it had never been inCommittee are invalid. (4) In case such corporation should for a period of twelve months neglect or refuse to distribute the income paid over to it. shall of the corporation. by the corporation out of the net income paid over to but the members of the corporation shall serve without of said corporation. including such compensation to the employes or agents thereof as the Trustee shall be paid it. however. (3) ceipts The accounts and disbursements on account of income and the condition of income on hand. shall annually be audited by an auditor employed by the Trustee.456 TRUST COMPANY LAW Trustee shall not be responsible for the application of said income. as set forth in Article disbursement of income shall also in like Sixth hereof. and the Committee shall exercise all its rights. provided. such provisions shall be corporated. showing re- compensation. and the Committee shall become advisory only. The expenses fix.

Neither the Trustee nor any successor trustee or trustees shall be required to give bond or any surety upon a bond for the faithful performance of the trust hereby reposed in it. the Committee as the corporation had never existed. and upon such dissolution and thereafter the Committee shall exercise all the powers and duties herein they deem it desirable. but only such power. except as otherwise provided. purposes or provisions hereof are invalid. given to it as fully and completely as if said corporation had never been formed. The Trustee may. and the enumeration of specific purposes and powers shall not be construed to limit or restrain in any manner the meaning of general terms. If a court of last resort shall decree that any of the powers. by a vote of four-fifths Twelfth. purposes and provisions herein granted. Eleventh. purpose or provision so decreed to be invalid shall be limited. purpose and provision. shall be regarded as separate and distinct from every other power. and all other powers.COM MIXITY TKl 457 wind up and dissolve said corporation. him or them. Each and every of the powers. (7) Upon dissolution of the corporation under (5) or (6) the then members of the corporation shall be the if then members of Tenth. purposes and provisions hereof. of the entire number of its Board of Directors and with the approval of five-sevenths of the Committee and with the assent of the Attorney-General of the Commonwealth . purpose or provision hereinbefore granted. so that no one shall be limited by reference to or inference from any other. this shall not in any wise limit any other power. shall be unmodified thereby.

and shall not affect the construction of this Agreement and Declaration of Trust. Boston Safe Deposit and Trust Company by Charles E. At one copy shall always be kept on office file and open to public inspection in the of the Trustee. Boston Safe Deposit and Trust Company has caused its corporate seal to be hereto affixed and this Agreement and Declaration of Trust to be signed in its name and on its behalf by its officers thereunto duly authorized. George E. each one of which shall be least an original and. Treasurer.458 TRUST COMPANY LAW of Massachusetts or the law officer of the Commonwealth who may hereafter have the supervision of charitable trusts. In Witness Whereof. the methods of distributing income and other details of the machinery of administration. Fourteenth. This Agreement and Declaration of Trust may be printed and executed in as many copies as seem desirable. the day and year first above written. entitled to record. [Corporate Seal of Boston Safe Deposit and Trust Company.] . Any margined notes which are in- serted are for convenience of reference only. but no such change shall in any way alter or abridge the charitable objects and purposes of the trust. Thirteenth. change the name of this Fund. Goodspeed. Rogerson. President. as such.

its poration by authority of Charles M. Goodspeed acknowledged said instrument to be the free act and deed of said corporation. to me personally known. Rogerson and George E. Rogerson and said George E. . 1915.COMMUNITY TRUSTS 459 Commonwealth Suffolk of Massachusetts | / day of September.] Public. and that said instrument was signed and sealed in behalf of said cor- board of directors. and that the seal affixed to the foregoing instrument is this seventh On the corporate seal of said corporation. Rogerson. before me appeared Charles E. and said Charles E. Goodspeed. Notary [Notarial Seal. who being by me duly sworn did say that they are respectively the President and the Treasurer of Boston Safe Deposit and Trust Company.

with notes covering their judicial construction. reetc. In the larger proportion of these chang- ing provisions. Portland & Ogdensbury R. which. Forms of mortgage-trusts must necessarily differ in order to express the intention of the parties under the varying circumstances under which they are made. Sec. see Jones on Corporate Bonds and Mortgages. It will not rely upon all its obliga- tions being expressed within the four corners of the instrument." are usually inserted. 316. the trustee is not greatly interested. certain covenants. Examples of such clauses. and govern its compensation. for convenience. fore read a proposed trust. 254 of the New York Real Property Law. that where legislation has pro- vided for the rights and duties incident to trusteeship. 2 It will therethese need not be stated in the trust-deed. moval. It 1 should know. . Fed. are given below For citation of statutes of several states prescribing the rights 1. may be termed "trustee clauses. An example of legislative provision for the construction to be placed upon particular covenants is found in Sec. resignation.: 460 TRUST COMPANY LAW Mortgage-Trustee Clauses Annotated Preliminary. v. in the light of such legislation. to For its protection against excessive liabilities. (1882). 10 2. 604. Mercantile Trust Co. however. and duties of the mortgagees of railroads.. and the general implied duties spoken of in section 56 of this book. conduct.

(1906). that the liability imposed on and accepted by a trustee may be limited by the terms of the instrument from his out instituting proper inquiries. it not prevent the trustee from being held liable for losses arising did having made sales or investments with"In The Court said my judgment it is clear both from principle and authority. tion the rule for If there is such a clause of limita- measuring the trustee's liability is to In conbe sought in that clause properly construed. "he had read the testimony with care.MORTGAGE CLAUSES 461 General Exemption of Liability Except for Willful Default. Eq. the meaning to be attributed to it should be consistent with the purpose and object of the trust. or may have misconceived his obligations. 36 N. 617." and intentional breaches of the said 3 Such a clause was held in Black v. Though its general effectiveness was recognized in the opinion. struing such a clause. J. breaches of trust whereby the value of plaintiff's bonds had been completely lost. 4. and I find no evidence that should have been submitted to the jury of a 'willful and intentional breach of trust. .' The defendant may perhaps have made mistakes. "The Trustee shall not be liable except for its own willful trust. but to call the omissions to act of which the plaintiff complains 'willful and intentional breaches' of his trust seems to me to be impossible. Gilmore 4 it appears that the above clause was inserted in a conventional trust deed. and a strict rule of construction should be applied 3. 359. 143 Fed. Wiedersheim to exonerate a mortgage trustee from liability for alleged. (1883). : creating the trust. The judge said that with the above provision in mind." In Tuttle v.

Holland Trust Co. 644. E. Y. the trustee is when so trustee was entitled to the benefit of it. and to the extent only of the debt and accrued interest as represented by the bonds when certified by the trustee." The New York Court "The law requires the exercise of good faith and no matter strong the provisions to shield from liability may be. Co. E. 6. 7 Supp. Tod (1905). 7. 190." Interest coupons detached from the bonds under a mortgage containing the above provision prior to the certification of the bonds by the trustee do not entitle the holder to payment.462 TRUST COMPANY LAW as against the claim of restriction. 194. 925. Guaranty Trust Co. Supp. Stewart It et al 5 in fixing the liability of mortgage trus- tees. as such. (1902). v. construed. 51. Thomson-Houston El. v. "The bonds secured hereby shall not be valid until the certificate has been indorsed thereon by the trustee. since not until that act was performed did the bonds come under the mortgage. (1889). "The security of the mortgage inured only to the bondholders. N. 111 N. 68. Div. Ltd. (1912). 19 N. there is no protection unless good faith is observed. 211 Mass. 180 N. a limitation on the liability of the clearly intended. 97 N. and Partridge v. Y. affirming 62 N. American Trust Co. App." So where bonds were stolen before the trustee's certificate was attached. 782. was there held in that as the acts complained of were done good faith. (1914). ." A similar clause was likewise considered in Hollister v. Y. 1090. Y. 299. 170 N. 215. Y. But if. 150 N. 62 N. See also Hunsberger v. Y. 71 N. there could be no claim under lien of the 5." how Certifying the Bonds. E. Industrial & General Trust. E. judgment should run against of Appeals has said: 6 "the trustees as such and not personally.

v. Y. et al. 83 N. was only to authenticate. & Tex. when : that is. which. As it has not been performed. refiling. performed. or recording of this mortgage. Maas et al. (1SS0). in its opinion.five per cent in amount of the bonds hereby secured. . Kan. Ry." Indemnity and Written Request to Act. Co. the bonds were not complete or perfect and have not become the contracts of the railroad company. 'to determine as real and true rested in 'supposition' to render . nor shall the Trustee be required to take any action in respect of any default unless requested to take action in respect thereof by a writing signed by the holders of not less than twenty. and pronounce them genuine. 223. then outstanding and tendered reasonable indemnity as aforesaid. Mo." No Duty to Record. "The Trustee shall not be under any obligation to take any action toward the execution or enforcement of the trust hereby created.MORTGAGE CLAUSES 463 8 The court said 'The act of them. or to take action without such request. . as they were void. nor this provision therefor. unless one or more of the holders of bonds hereby secured shall as often as required by the Trustee furnish a reasonable indemnity against such expense or liability.." 8. such notice or request. "It shall be no part of the duty of the Trustee to see to the filing. the trustee. shall be liable to involve it in expense or liability. shall affect any discretion herein given to the Trustee to determine whether it shall take action in respect of such default. anything herein contained But neither any to the contrary notwithstanding.' until performed its the bonds effect when performed was them obligatory.

(1911). 10. Such a does not prevent a trust company from making a bonds special independent contract with a purchaser of to record the mortgage and rendering 10 itself liable for failure to do so. Ridgewood Trust Co. 327. 1. "is chargeable with any loss resulting from his neglect to record the trust deed. zvhich it may deliver over on receipt of such orders or requests as aforesaid/' The above upon its clause of a trust company. c. under a deed which contained no port is 9 specific direction as to the trustee's duty to record. Liability to See to Applica- "Nothing herein contained shall be so construed^ as requiring the. Farmers' Loan & Trust Co. shall be applied by the trus- Miles v. J. 11. laches clause The claim of negligence by the was held to be barred by and the New York statute of limitation. Vivian v. et al. 79 Rhinelander v. said trustee to inquire into the application of the funds. 172 N. 79 Fed. "The sinking fund 9. N. .464 TRUST COMPANY LAW Insertion of the above clause or one of similar im- an essential protection in the light of a decision of the Circuit Court of Appeals in the second Circuit that a mortgage trustee. however. (1897). McCauley 529. Exempting Trustee From tion of Funds. (1902). Atl. alleged obligation to exact Application of Sinking Fund. 519. Y." trustee in this case. 848. or of the bonds. was held not to apply in defense when the claim against it was based from the mortgagor a statement showing the purposes for which each issue 11 of bonds was to be used.

" under the above clause. the trustee would certainly allow the unmatured long-term bonds to remain unpaid. in the serial bonds which were maturing each year. "In the exercise of a reasonable business discretion. 227 Pa. in the manner provided in this article. Only after the retirement of the serial bonds would it be justified in applying the sinking fund to the purchase of * the higher priced long-term bonds. St. in their numerical order beginning ivith the lowest outstanding Bond. and at such prices as may be approved by the trustee (not. in the opinion of the trustee. bonds cannot l>e so purchased. then towards the redemption. shall have no right to Struthcrs Coal & Coke Union Trust Co. be redeemed and retired) of one or more of the bonds secured thereby. however. is clearly a matter for correction in a court of 12 Release of Property Pledged. in preference to serial bonds as they fell due. Any abuse of discretion upon the part of a bound to deal fairly trustee equity. and the discretion which it may use is a legal discretion. (1010). 75 Atl. (b) If. 986.MORTGAGE CLAUS tee: 465 (a) Towards the purchase and retirement from time to time in such maimer. that the trustee was not justified in redeeming long-term bonds at a premium. as long as it could find invest- ment for the sinking fund. and not an individual and arbitrary judgment. . and which it could call in payment and surrender upon any interest paying date. It was held. v. exceeding the price at which such bonds under the terms thereof. railroad company Co. is * * The trustee and equitably with all parties to the transaction. 29. of the bonds issued and outstanding hereunder. "The 12.

the holders of a majority in amount of all the bonds secured by this indenture. 10. may notify the said trustee. (1912). 121 Md. in writing. Continental Trust Co. all the provisions of this article shall relate to Pacific Missouri Railway Company v. pending default. Misc. trust deed. provided that of equal value is is 14 money or property substituted by the mortgagor. 15 It must be expressly provided in the Revocation of Foreclosure or Sale by Majority of Bondholders. 88 Atl. and shall take no further steps to sell said securities unless and until another default by the said parties of the first part. Colorado & Southern Ry. "It is expressly provided. Such a strictly construed. Mercantile Trust Co. however. E. Vernon-Woodberry Cotton Duck Company v. 76 N. Y. 15 can be implied. v. 497. No power to withdraw. 15. substitute or change the security. 103. at the time outstanding. 214 N. that they desire to revoke the declaration that the principal of said bonds is due. clause is frequently inserted permitting a release of the property pledged. of Baltimore (1913).466 TRUST COMPANY LAW secure the withdrawal and release from the trust of any of the stock pledged under the agreement except upon the redemption and payment of all the bonds. that at any time prior to the sale of said securities." This clause was held not to apply to nor prevent the withdrawal of stock deposited with the trust company in excess of the amount called for in the agreement. 163. This excess was held by the trust company as bailee and 13 not as trustee under the agreement. . Co. A clause sell. as hereinbefore set forth. 108 N. Blair (1915). and 13. Y. 14 Mt. 840.

said "If there is any proposition well it settled in the courts of the United States. during any period wherein the Trustee shall manage the trust property or premises upon entry or voluntary surrender as aforesaid. in part. (1894). ''The Debtor Company shall keep at the Trustee's office. bond transfer books. or for salaries or non-fulfillment of contracts. was held clause related only to a sale of the securities and not to foreclosure proceeding's." Registration of Bonds. Judge I air- ton. Co. Ry. any debts contracted by "Tlic Trustee shall not be personally liable for it. on which the transfer of any of said bonds shall.: MORTGAGE CLAUSES and govern any succeeding default by said parlies of the first part" Upon revocation of demand for it foreclosure by a that the ab majority of the bondholders. * * Under the rule of strict con- struction." Exemption From Personal tracted When Liability for Debts ConTrustee Is in Possession. the provision requiring the trustee to 'take further steps to sell said securities' applies only to a no sum- mary It under the power vested in it by the mortgage. and thai minority bondholders had a right to insist that foreclosure be had. has no application to a proceeding begun by it in a sale 1 court of equity to secure a judicial foreclosure. or for damages to persons or property. Tolcr v. * is that limitations contained in a mortgage. upon request be registered without expense /<> . must be strictly construed. in the city of New York. restricting the right of foreclosure. 16. East Tcnn. 67 Fed . & G. V.

Sohn (1914). 28 Am. 17 Recitals in Deed and Bonds. "The recitals and statements of fact herein contained and contained in the bonds secured hereby shall be taken as statements by the Mortgagor Company. the person in zvhose name any bond is registered on said books shall be taken to be the holder and owner thereof." Registration of bonds and tration its assimilation to regis- and transfer of stock is treated in Chapter XTII of this book. For the purpose of administering the trust created by this mortgage. "The Trust Company may employ agents or attorneys in fact." Clerical duties may be delegated by the trustee without express authority. & Eng. 82 S. after which no transfer therefor can be made. noted on the bond. when the bond will become transferable by delivery until again registered in like manner in the name of the holder. Encl. 1016. until registered payable to bearer. request or other instrument required by this mortgage to be signed and executed by bondholders shall be authenticated by an instrument or 17.468 TRUST COMPANY LAW Each registration of a bond shall be the holder. 767." Requests by Bondholders to Be in Writing. Power to Employ Agents —Limitation of Liability For. E. of Law (2nd Ed. Copelan v. and shall not be construed as made by the Trustee.). except on said books. "Any . employment of auctioneer to conduct sale is a proper delegation of authority. and shall not be answerable for the default or misconduct of any agent or attorney appointed by it in pursuance hereof if such agent shall have been selected zvith reasonable care.

< LAUSES in writing signed by the persons assenting thereto. or "It shall not be . any part of the Trustee's duty pre or other damage on against to effect insurance property. bank. and the date of his holding the same.MORTG \'. "The amount and serial numbers of bonds held person executing any such request or other any by instrument. or by an affidavit of a witness to such execution. or their attorneys in fact duly authorized for that purpose and proven as herein provided. The ownership of registered bonds shall be proven by the registers of such bonds. bankers or other depositary (wherever situated)." Insurance and Taxes." Proof of Request and Ownership of Bonds. Such proof shall be conclusive in favor of the Trustee with regard to any action by it taken under such request or other instrument. or to renew mortgaged any portion of the keep itself informed to any policies of insurance.i. may be proven by a certificate executed by any trust company. showing therein that at the date therein mentioned such person had on deposit with said depositary the bonds described in such certificate. Any instrument in writing required by the provisions of this mortgage to be executed by the holders of bonds hereby seen red may be in any number instruments of parts/' Proof of Request by Bondholders. "The fact and dale of the execution by any per- son of any such request or other instrument or writing may be proven by the certificate of any notary public or other officer authorized to take acknowledgments of deeds that the person signing such request or other instrument acknowledged to him the execution thereof.

. 157 N. 5 S. Y." was thought that these rules did not necessarily apply 18 Nevertheless. Code of Civil Procedure) providing for the compensation of a "trustee of an express trust. 3320 N. Mercantile Trust & Deposit Co. Compensation and Expenses as Charge Upon Estate. Co. 29 N. all expenses of pro- Miami Gas & Fuel Woodruff v.. N." Compensation of Trustee. Y. in its discretion. 19. R. Div. Co. do any or all of these things. 542. 142 N. Y. Y. 139. 862. 99 N. L. v.. & W. trustee had brought foreclosure proceedings and had It brought considerable other litigation in behalf of the bondholders. Y. App. shall be entitled to rea- "The Trust Company sonable compensation for all services rendered by it in the execution of this agreement. Pickerell (1888). 20 27. R. (1891). Supp." An express provision in the trust deed for "just" compensation has been held to exclude a statutory rule (Sec. 251. E. N. but the Trustee may. he was entitled to compensation at the rate usually awarded to executors and administrators. E. Mills (1913). trustee a lien on the of inserting the next succeeding clause. and such compensation as well as all reasonable expenses necessarily incurred and actually disbursed hereunder the mortgagor company agrees to pay. 129 C. E. al. where a mortgage to' a mortgage trustee. 19 A clause similar to the above does not give the mortgaged property to secure pay20 Hence the advisability ment for services performed. "Such compensation and is. et v. or to require such payments to be made.470 TRUST COMPANY LAW as to the payment of any taxes or assessments. 417.

20 Resignation of Trustee. al." Appointment of Successor in Upon Removal W." 1 unnecessary Removal of Trustee by Vote of Bondholders. & Deposit Co. Boston Gaslight Co. and to prevent the removal of the trustee by legal proceedings A where good reasons were not shown for disregarding this voting method. 359. 80." is Express resignation of the trustee where he abrogates the trust. the bond- "A 21. (1899). . Pickerell. or such shorter notice as the Raikvay Company may accept as sufficient. 54 majority v. number and value of S. E. and all legal and other expenses actually incurred by the Trustee. et al.MORTGAGE CLAUSES 471 tecting the trust estate. 433. Kraff (1S9S). 174 Mass. 4G v." provision largely similar to the above was held controlling. and the proceeds thereof paramount to the bonds secured by these presents. 22. of Trustee. 144 Mo. shall charge upon the hereby mortgaged premises. office at "The Trustee may be removed from any time by an instrument in writing under the hands of the holders of three-fourths in par value of the bonds hereby secured and then outstanding." constitute a See Mercantile Trust supra. et 424. Reynolds Dillaway N. v. "The Trustee may resign the trust hereby cre- ated and become and remain wholly discharged from all further duty or responsibility thereunder upon giving sixty days' notice in writing to the Raikvay Company.

duly acknowledged or proved. (N. nezv Trustee appointed hereunder. deed "Any such with 23. and upon an action for removal of trustee eliminates any question which might otherwise exist as to a Court's power to appoint a successor. And that. 11 130.) & Trust Co. Farmers Loan and Acceptance by Substituted or Successor Trustee. tends to restrict this litigation (action for removal) to the determination whether the trustee shall or shall not be removed from its office under the mortgage. Hughes. properties. 24. shall Railway Company an to the also and tee last in office hereunder. (1890). by an instrument in writing. powers. (N. 58 Hun. under their hands. all v. and deliver to the Trusacknowledge execute. 449. the estates. (1877). and recorded. v. to be a trustee 'under the mortgage in case of the removal of this Trust Company. . Y. appoint or select one or more person or persons. certainly.472 TRUST COMPANY LAW holders may." Such a clause is effective for the purposes stated. or ther act. or any other corporation. 23 "This It was thus characterized in the case cited provision secures ample authority to the bondholders to select a trustee to execute and enforce the trust and : obligations created by the pany its shall mortgage if this Trust Combe removed by the judgment of this court from position. rights. appointment such accepting instrument without any furTrustee new such and thereupon vested become shall conveyance. Gibson American Loan Hun. Y." The selection of a trust company in as successor trustee under such a provision was upheld 24 Trust Co.) 443.

with like effect as if originally named as Trustee hereunder. rights. "The parties shall in any such ease make and execute upon request whatever deeds. duties 47. such estate. Co. releases and assurances may be legally necessary and advisable for the more fully vesting in and confirming to such hew Trustee. conveyances. (1897). E. 226 Fed. & v. 111." Acceptance of a mortgage trust is presumed. Craft National Bank of Goldsboro v. 26 25. 26. and the Trustee ceasing to act shall duly assign transfer and deliver any property and moneys held by such Trustee to the new 'Trustee so appointed in its place. Indianapolis D. 102. powers and duties. 1132. assignments. W. 166 580. and obligations of its predecessor in the trust hereunder. transfers. Ry. 46 N. though under the ordinary provisions for successorship." . Insertion of the above clause is a proper precaution. title to the property conveyed by the trust deed vests in the successor trustees. Hill ( 1915). .3 MORTGAGE CLAUSES trusts. Conveyances to Substituted or Successor Trustee.

seems wise to your Committee. In view of the fact that a knowledge of the In the report to the made by your Committee matter presented in this report is essential to an intelli- gent consideration of the whole subject under discussion. Cleveland. Baltimore. the Committee as then constituted took up. November 12. The members first of the Association will recall that when the Committee on Railroad Trusts was formed in in Bonds and Equipment 1912. Board of Governors at their meeting in Boston in August an outline was given of the work of the Committee up to that date. Boston. who had acted as Trustees under indentures securing Equipment Trusts. what was the general practice of these Trustees . Pittsburgh. and to. Chicago. even at the risk of repetition to review the work done by the Committee up to that time. 1914 Introduction. Phila- delphia. then bring forward the discussion to the present date by a review of the work done since our last it report.. etc. by correspondence with the principal Trust Companies New York.474 TRUST COMPANY LAW Report of the Committee on Railroad Bonds and Equipment Trusts to the Board of Governors and Members of the Investment Bankers' Assoat Their ciation of America Third An- nual Convention Held at Philadelphia.

lost or destroyed. for the replace- ment of equipment worn out. if it was found that the Railroad was not maintaining the equipment propTrustees had no power to force the Railroad to maintain or replace the equipment by declaring a default erly. The whole question of Equipment Trusts and the sufficiency of equipment as security for an Equipment .EQUIPMENT TRUSTS 475 to provide for the maintenance by the Railroads of the equipment pledged under such Trusts. and that they did not consider it part of the duty of the Trustee to see that the covenants of the Trust were carried out. On the whole. but the amount of responsibility assumed by the Trustees varied from an honest effort to protect and maintain the value of the security pledged for the Equipment Trust. and what steps these various Trust Companies took to keep them- selves advised as to the condition of the equipment pledged under the Trust. and that the difficulties to the fact that the which they had to overcome were largely due banking houses who originally purchased the Equipment Trust had not been insistent that specific agreements be included in the indenture which would enable the Trustees to obtain the necessary information from the Railroads as to the condition of the Equipment pledged. however. it was clear that the Trust Companies were using their best efforts to protect the investor in Equipment Trust obligations. At that time it was found that there was no general course of action common to all the Trust Companies. In some cases the Trust Companies used definite forms for periodical reports on the condition of the equipment. to a position assumed by one Company that it had no responsibility whatever for the security underlying these equipment obligations. the under the indenture. and secondly.

In these conferences your Committee has found a most laudable desire on the part of all spirit of co-operation and rea- parties to do whatever was sonable and proper to ask them to do to protect the investor. During the past year a number of conferences have been held by your Committee with the representatives of the different Trust Companies.476 TRUST COMPANY LAW Trust is one which goes into the very heart of the theory and the practice of railroad accounting. altogether satisfactory. Nevertheless the fact remains that the Trust Companies accept Trusteeships under indentures which are approved as to their legality but which are not. auditing and financing of the corporations of this country have undergone many changes during the past few years. truth were known. certain clauses in indentures securing Equip- ment Trusts. all of which changes tend to safeguard and protect the interest of the investor in the securities of these corporations. if the While conditions affecting the management. . It is our belief that these clauses wall enhonestly and faithfully tries to able the Trustee who carry out his duties as provided in the Trust Agreement to maintain the value of the equipment pledged as security under the Trust. and to suggest the incorpora- tion of. bringing with it questions as to what is adequate maintenance and what is the true value from time to time of equipment through The practical constructive its depreciation year by year. with banking firms handling Equipment Trusts with various counsel and with the executive officers of a number of Railroads who are most conversant with the practice of issuing equipment obligations. work to \vhich your Committee has endeavored to confine itself has been to prepare.

.EQUIPMENT TRUSTS 477 and while there has been a growing realization of the obligation of the Trustee to the public. the value relative to the amount of the loan being viz. Equipment Trust which was based on an original cash payment of 20 per cent with a loan maturing in not more than ten annual installments and with the title to the equipment remaining at all times in the hands of the Trustee or Banker making the loan has changed till now we have Equipment Trusts running fifteen years or longer with 10 per cent cash paid in instead of 20 per cent. over $1. has confined its Your comto work to an endeavor improve the indentures securing Equipment Trusts. yet the develop- ment of the indenture securing Railroad Bonds and Equipment Trusts has been along lines to make these indentures more and more flexible and more and more of a character to enable the borrowing c< irpi -ration to best serve its the interest of the own ends rather than to protect The whole theory of the investor. —that there be a constant so preserved despite depreciation or obsolescence of the These factors should receive the collateral so pledged. with the title of the Equipment being held by a corporation or by individuals who are nothing else but a different name. where the title to the equipment has reverted back to the railroad against each installment of principal paid. and in under the railroad itself acting one case an Equipment Trust has been issued by one of the most important railroads. mittee. however. amount of of the amount collateral pledged for an ever decreasing loan.000 of which are outstanding at the present time in the hands of the investor.000. serious thought of the Investment Bankers. which vitiates the fundamental principle of Equip- ment Trusts.

and the . Attachments and judgment creditors of the Railroad Company. group themselves under the following heads I. Purchasers for value and subsequent mortB. It is not the custom to record the Agreement of a Company whose line is solely in New York for instance. in every State of the Union. The Proper Vesting of Title in the Trustee to the Equipment Pledged under the Equipment Trust. These principal matters which need. in the judgment of your Committee. acquired property clause covering rolling stock. while the Company which owns the cars may have lines only in one or two States. protect the Trust against these classes of claimants. and no matter how well the actual indenture may be drawn. Prior mortgages which contain the usual afterC. is properly recorded . but here we run into a inasmuch as cars are moved all over the United States and Canada in the ordinary course of business. This problem is one of the most important. the The is not fully provided for. if it safety of the investor subject is does not sufficiently cover this important detail.: : 478 TRUST COMPANY LAW Provisions to Be Incorporated in the Equipment Trust Indentures. As to the first two. complex and intricate and we cannot enter into a full discussion at the present time. the existing special rolling stock recording acts which have been passed in practically every State of the Union and in Canada. to be especially considered in the drawing of Equipment Trust Indentures. if the Trust Agreement difficulty. classes of persons We can merely point out that the Trust has to be protected against three A. gages of the Railroad Company.

In addition various schemes have been prepared by which individuals or car companies acquired . goes through a form of then making a conditional sale in which case the title to the equipment comes to the Railroad subject to the is rather in the naprior lien of the Equipment Trust ture of a chattel mortgage. the important thing is to make perfectly sure that the title to the equipment vests in the Trustee of the Equipment Trust before the Railroad acquires any title whatever thereto. and in your Committee's opinion also. gives to the Trustee of the Equipment Trust only a junior lien and not a first It is therefore extremely imlien on the cars pledged. due largely to the fact that it is usually extremely inconvenient to the Railroad Company to go through the neces- made directly sary steps which are involved in the process of preventing the title from vesting prior to the execution and recording of the Trust. for it is obvious that if. a Railroad Company constructs or acquires cars and thereafter. or caught through attachment. portant always to provide that no part of the equipment to be covered by the Trust shall be delivered to the Railway Company prior to the execution and filing for record of the Agreement. Of recent years a great deal of laxity seems to have become prevalent with respect to these details. for instance. by arrangement with bankers and a Trust Company. With regard to prior mortgages containing the after-acquired property clause.EQUIPMENT TRUSTS question arises as to whether title 479 to these cars will be properly protected in other States in case they were sold there to a purchaser without notice. the agreements for the construction of the cars should be between the car manufacturers and the bankers or the Trustee of the Equipment Trust. and being made subsequent to the Railroad's existing — — mortgages.

We do not refer here to the so-called form of Equipment Trust issued under what is commonly known among bankers as the Philadelphia Plan. replacement of worn-out. The maintenance of Equipment pledged under the indentures at all times' in good workable order and the II. these arrangements are open to question on the thereafter selling ground that these individuals are usually either the Rail- road itself in a different form. phase of this question . We because we feel that while the investor has. both the Investment Banker and the Investor has become careless in his investigation as to the form of the indenture. up to the present time been fortunate in the very few defaults which have occurred under Equipment Trusts. it is of the utmost importance that in the future more than usual care be taken in the drawing of these indentures and in the protection of the investor. arranging for leases of the same to the Railroad equipment leased certificates to and bankers. and the individuals being agents of the Railroad Company and not representing anybody else. under which the Equipment Trusts which he purchases have been issued. Through long practice and a feeling of false security arising from the fact that there have been so few defaults of Equipment Trust in the past.480 TRUST COMPANY LAW cars from time to time for the uses of a particular Rail- road. lost or appears to your Committee to be a destroyed equipment. Although this practice has become quite common. with the changing conditions now confronting the railroad industry. Maintenance of Equipment. the stock of the car company usually being owned by the Railroad Company. but to certain other forms of Trusts in which individuals appear as the have gone into this question at great length lessors.

New equipment has been bought by means of the issu- ance of additional new Equipment Trusts. your Committee deem it wise to have regular reports made to the Trustee by the Railroads. if they had been made. would have made the purchase of additional equipment unnecessary. The necessity of a road making as good a showing as possible of net earnings in order to preserve their credit for additional resort to capital borrowing has tempted roads to expenditures rather than to maintenance charges. During the past year a number of situations have arisen where when a railroad has got into or was facing financial difficulties we have found that the equipment pledged under the Equipment Trusts have become so depreciated in value as to seriously impair the security of the Trust Certificates issued against it. equipment pledged. and we strongly urge that the Invest - . while needed repairs on equipment already owned have not been made. covering the condition of the ings.EQUIPMENT l i 481 which should receive much more careful attention than has been accorded to it in the past. which being charged to operating expenses would in turn be reflected in their statement of net earnIn order to prevent such practices. which repairs. drawn from service owing When cars have been with- to their bad condition. these cars have not been repaired and their value maintained. of many has unfortunately not been the practice Trustees or of the banking firms handling it Equipment Trusts to require of the Railroads that these provisions in the indenture shall be lived up to. While we realizethat almost all Equipment trusts have provision in the indenture requiring: that equipment shall be maintained or replaced. and to insist that the Railroads officially perf< >rm the obligations that they originally agreed to. new equip- ment has not been added. When cars were lost or destroyed.

that no provision has been incorporated in the indenture to prevent the extension of such maturing obligations. and we strongly recommend that a clause be included in indentures which will prevent such extension. in looking into a number of these indentures. prepared forms to be used in making reports as to the condition of the equipment. III. the Trustees be placed in a position to take such action as shall conserve and protect the interest of the investor. after consultation with various Trust Company officials and Railroad officers. In order to safeguard against this practice we believe that the necessary funds sufficient to pay the principal and accrued interest of notes as they may become due should be deposited with the Trustee to be . your Committee has.482 TRUST COMPANY LAW ment Banker face the responsibility accruing to him when he handles Equipment Trusts to see that these reports by the Railroads are made to the Trustees . which forms are attached to this report. so reducing the amount of indebtedness against any given amount of equipment pledged. Funding of Payment of Principal and Interof the fundamental principles of an Equipment that each six months or each year a certain pro- One Trust is portion of the certificates outstanding shall be paid off and retired. and which we urge be used by the Railroads and the Trust Companies. and that in case the value of the equipment is not maintained by the Railroads. To accomplish this end. Your Committee has found. est. that the Trustees keep accurately informed as to the value of the equipment from time to time. is is In this manner the depreciation of the equipment offset as far as the security of the loan concerned by a reduction in the amount of the indebtedness against such equipment.

is We believe that if the strong public opinion aroused . by the Railroad Com- pany. which we believe o >ver the above requirements. In order that the Trustee may it is position to protect the investor. necessary that an en- forcing clause be included in the indenture. provision be made that the Trustee shall be given full and complete draw- ings describing the equipment pledged so that in case of default the Trustee may have it a full record information to enable to effect sale it and complete of the equipment wise for the or to take such other steps as protection of the Trust. nor should the Railway Company extend Miconsent to the extension of the time of the payment of the same shall operate to the principal or interest of any Equipment Trust. and your Committee recommends that Investment Bankers handling Equipment Trusts study these clauses which are appended to this report and wherever possible have such clauses or clauses similar to them incorporated in the indenture securing Equipment Trusts which they may sell to their clients. and that when such notes are paid they should be cancelled and no notes in substitution of them issued. It is of the utmost importance that no purchase or sale of notes or advances upon keep equipment notes alive a finmaturity. be placed in a proper IV. may deem With the advice of counsel your Committee has prepared certain specimen clauses to be included in indentures securing Equipment Trusts. which will enable the Trustee to declare a default if the provisions of the indenture are not lived up to. Your Committee also strongly recommends that when an Equipment Trust is drawn. Enforcing Clause.EQUIPMENT TRUSTS 483 used for the payment of such notes.

This. It is the part of wisdom to investigate at regular intervals whether his and his clients' The responsibility of the Investment interests are being properly safeguarded both by the Railway Company and by the Trustee." says the old adage and the Investment Banker could many times have prevented the difficult and unpleasant situation confronting his client and him- . Banker does Trust CertifiEquipment not cease with the sale of the cates to his clients. feel that it is necessary to enlarge on one most important phase of this question which must be self-evident to you all. investigation was and perhaps what is of even greater importance. without thoroughly considering the moral risk involved in the loan arising from the methods and character of the management of the borrower. and by establishing through the pressure of well directed public opinion an active oversight by the Trustee of the methods pursued by the Railway Company in living up to the terms and spirit of the indenture. then the principal weakness inherent in Equipment Trusts will be removed. The Obligation Your committee of the Investment Banker. is but a means to the desired end. The value of the collateral under any loan and the maintenance of the value of such collateral can be safeguarded to a certain extent by the terms of the indenture. however. "A stitch in time saves nine.484 TRUST COMPANY LAW will which demand that clauses of this character be in- cluded in the indenture. Eagerness tive conditions to do business bred by over-keen competi- ations where securities have led many of us in the past into situhave been bought and sold becareful intelligent fore sufficiently made of the terms of the indenture.

they will make it difficult for many of the evils to exist which are now confronting our profession of Investment Bankers. If our members will make themselves familiar with what provisions should be included in a properly drawn indenture securing Equipment Trusts. and if and the Railway Company live up to the terms of the Equipment Trust agreement that both entered into. the numbers and description of such cars and engines as may have for the period for which it is . This statement shall shall furnish a show made. The greatest evil today in connection with the prob- lem of Equipment Trusts. the Investment Banker and the Investor is this neglect of investigation and regular oversight. Clauses to Be Incorporated in Indentures Securing Equipment Trusts CLAUSE I. To Cover Reports to the Trustee as to the Condition of Equipment Pledged Within thirty days from the first of each January and July and at such times as required by the Trustee until the full performance of this agreement the Railway complete statement as of the date stated of the equipment covered hereby.EQUIPMENT TRUSTS self if 485 he had followed the useful course of doing what he could to prevent the loss by consistently and regularly keeping himself advised as to the true situation and value of the equipment pledged from the time he assumed the responsibility of the loan by placing it with his client. then. if they will refuse to handle Equipments unless the indenture be they will continue to guard their clients' interests regularly and systematically after they have placed the issue by seeing to it that both the Trustee properly drawn.

4S6 TRUST COMPANY LAW been destroyed or substituted by others. worn out. . the Railway Company within six months from the date when said equipment shall have become withdrawn from service for any of the above causes. shall replace said equipment by other equipment of like character and equal value. destroyed or permanently withdrawn from service within six months from the date said equipment has become lost. If any locomotive. show further what cars and locomotives are in use and the number of pieces in bad order or permanently withdrawn from service. however. elect not to trust. worn out. not desired to annex the specific form recommended.) (If it is CLAUSE II Covering Maintenance and Replacement of Equipment The Railway Company shall and at all times keep all expense such equipment and any equipment will at its that be used to replace any part thereof in good working condition to the satisfaction of the Trustee. but it need not show their whereabouts more in detail. This and other information required shall be set forth in a form substantially like the one Shall annexed as schedule. the numbers and cost of all cars and engines built or purchased to replace destroyed equipment. and equipment awaiting repair. worn out or destroyed or permanently withdrawn from service for any cause whatsoever. equipment repaired during the period. car or other equipment covered may by this indenture shall be lost. and shall place said equipment subject to the indenture securing this equipment If the Railway Company. destroyed or permanently withdrawn from service. replace said equipment lost. the last sentence can be omitted.

way Company or its duly appointed representative shall be sufficient evidence to the Trustee as to the value of A the equipment destroyed and as to its replacement. car or other equipment which has become lost. the Trustee shall repay to the Railway Company the sums deposited with it against each piece of equipment thus replaced. destroyed or permanently with- drawn from service and said amount shall be held and retained by the Trustee until said locomotive.EQUIPMENT TRUSTS 487 then the Railway Company forthwith shall deposit with the Trustee an amount in cash equal to the cost price of said locomotive. car or other equipment are replaced by other equipment of like certificate of the Railcharacter and of equal value. Out of the amounts so deposited the Trustee shall take up and pay the principal and accrued interest of the notes on that date falling due. worn out. immediately upon receiving such certificate and showing that the equipment destroyed has been replaced with proper plates attached showing the subjection of said equipmc n to this indenture. CLAUSE III Covering Payments of Principal and Interest The Railway Company covenants and agrees that on or before the date of maturity of any of the said notes it will deposit with the Trustee a sum sufficient for the payment of the principal and accrued interest of all the said notes falling due on that date. Such payment by the Trustee shall be made to the bearer of such note (unless it shall be registered. shall be made to the registered holder or his assigns) but only upon the surrender of All unpaid interest represented by coupons which shall have matured on or prior to the maturity of the principal shall continue to be payable to the bearer . in which case payment such note.

but in case default shall the Railway be made by Company in the payment as hereinafter provided of the principal of any of the notes issued hereunder. The Railway Company covenants and agrees that when and as said notes mature as therein and herein provided. shall operate to keep the said notes or said interest coupons. or consent to the extension of. whether such other notes and interest coupons be then matured or unmatured nor shall the Railway Company . extend.488 severally. or with the privity of the Railway. or at the request of. the said notes and the interest coupons shall be paid and cancelled respectively. when due and thereof. demand be made for the pay- ment and upon such default continuing for a period of thirty days. or advance of loans upon the same. payable. alive or in force est as against the holders of the other notes issued here- under and of the interest coupons pertaining thereto. CLAUSE The Railway the equipment at IV Covering Conditions of Default shall be entitled to the possession of all it times during the life of this agree- ment fulfill so long as shall comply with the conditions and the obligations hereof. or any of them. or in case default shall be made . and that no purchase or sale of said interest coupons or of said notes. or of any interest coupon. and no notes or inter- coupons in substitution therefor shall be issued. whether or not. the time of pay- ment of the principal of such interest coupon. All notes so paid by the Trustee with the moneys deposited by the Railway Company as aforesaid shall be cancelled by the Trustee and delivered to the Company and shall not be reissued. TRUST COMPANY LAW and respectively of such coupons. made by or on behalf of.

upon demand in writing by the Trustee. shall by shall begin. The Railway Company agrees that in event of any default continuing for 30 days as aforesaid it will as promptly as possible. the written notice to the Railway Company declare the prin- cipal of all of said outstanding notes to be due and pay- able. provisions. receive and retain all unpaid mileage or per diem charges earned by said equipment. coaches and cars composing said equipment and of every one thereof. and upon such declaration the same shall become and be due and payable immediately. and for the purpose of taking such possession the Trustee shall be entitled to enter upon and take and remove said equipment from the premises of the Railway. conditions or obligations of this agreement. anything in this . possess itself of the locomotives. tenders. or wherever it shall find said equipment. and the Railway Company shall afford the Trustee every possible facility and means of assistance to such end. at its the Trustee shall be entitled and opinion may.EQUIPMENT TRUSTS in the 489 due observance or performance of any other of the terms. covenants. if rein writing by the holders of a majority thereunto quested of the then outstanding notes issued hereunder. and shall be entitled to collect. and. and upon such last-mentioned default continuing for a period to. as said right to possession of the equipment As soon Trustee may at its option. of thirty days. The Trustee shall upon application to any Court of Equity having jurisdiction be entitled to a decree against the Railway requiring specific performance hereof. deliver to the Trustee each and every car and engine at such place or places upon the tracks of the Railway Company as the Trustee shall require. and will relinquish all claims or rights in or to the same.

at or after maturity. after deducting of expenses of such sale and of possessing themselves of such equipment. shall have been transferred or pledged separate and apart from the note to which it pertains shall. and apply the net all proceeds of such sale. any equipment which sell. without preference of one over an- other or of interest over principal. and if requested thereunto in writing by the holders of a majority of the then outstanding notes issued hereunder. coupon appertaining to any note hereby secured which in any way. and the reasonable all compensation to themselves for their services. and of the interest thereon. and the Trustee may also at its option. to any benefit of or No from this agreement. in such manner as the Trustee may deem expedient. be entitled. assessments and charges of every sort paid by the Trustee and of all charges of every nature against said equipment which properly should be paid. all expenses. insurance.490 TRUST COMPANY LAW agreement or in said notes to the contrary notwithstanding. with or without notice to the Railway Comshall sell said pany. payments made by the Trustee for taxes. to the payment pro rata of the then outstanding notes. or of any installment over any other installment. including attorney and counsel fees. unless accompanied by such note. may not be necessary sale. either at public auction or private sale. in case of a default hereunder. except after the prior payment in full of the principal of the notes issued hereunder and of all coupons pertaining thereto not so transferred or pledged. and with or without taking possession thereof. and any surplus of the net proceeds of . equipment or so much thereof as may be necessary. In case the Trustee shall so to make it sale as hereinabove provided.

herein. reckoning and computing said notes for that purpose at a sum equal to and not exceeding that which would be payable out of the proceeds of said sale or sales to said purchaser or purchasers. ing away under this agreement. charges and other payments connected with the trust and sale as aforesaid. in favor of the Trustee and the holders of said In the event of a sale made by the Trustee. after deducting the expenses. thereof. it is hereby expressly stipulated and agreed that the Trustee or holders of the notes issued hereunder may. for his or their just share and proportion. hereinabove provided. as notes. removal. EQUIPMENT TRUSTS shall be conveyed. in lieu of paying in cash the purchase price may apply and turn in any of the notes issued hereunder and unpaid towards the payment of such purchase price. but shall be cumulative. transferred 491 and paid to the Railway Company. . created in favor of the Trustee The remedies and of the holders of the notes issued hereunder. become the purchasers at such sale or sales of such equipment or any and that any purchaser or purchasers of said equipment. upon a due accounting concerning said proceeds and a due apportionment and distribution thereof. and in addition to all other remedies existing at law or in equity. takliable for such deficiency or sale of said equipment shall in no way prejudice any right or cause of action of the Trustee or the holders of the notes issued hereunder. In case the proceeds of such sale shall not all be sufficient to pay of said notes in full. or any of them. the Railway Company it shall be and remain being expressly agreed that the seizure.. as the holder or holders of said notes. if they so elect. shall not be deemed exclusive.

492 TRUST COMPANY LAW Suggested Forms to Be Used tion of in Reporting the Condi- Equipment INVESTMENT BANKERS' ASSOCIATION OF AMERICA Equipment Report —Form I Railroad Company Equipment Agreement Series Original Statement of Equipment Pledged Under Trust Agreement and in Actual Service. . Date Value to be Maintained $ Date of Acquisition.

Supt. N. is hereby certify that the foregoing statement correct. of Motive Power.EQUIPMENT TRUSTS 493 INVESTMENT BANKERS' ASSOCIATION OE AMERICA Equipment Report — Eorm II Railroad Company Equipment Agreement Series Equipment Destroyed During Six Months Ending Date Destroyed. 1917. Description. Y.. n al °cl t Totals New I York. . .

New I York. Cost. is hereby certify that the foregoing statement correct.. Totals. of Motive Power. Supt.494 TRUST COMPANY LAW INVESTMENT BANKERS' ASSOCIATION OF AMERICA Equipment Report —Form III Railroad Company Equipment Agreement Series Equipment Built or Purchased to Replace Destroyed Equipment During Six Months Ending Total Date of Acquisition. Nos. . 1917. Pieces. Description. Road No. . Value in Replacement. N. Y.

.EQUIPMENT TRUSTS 495 INVESTMENT BANKERS' ASSOCIATION OF AMERICA Equipment Report —Form IV Railroad Company Equipment Agreement Series Equipment Repaired During Six Months and in Shops for Repair and Present Condition of Equipment Date Description.

similarly certified. together with the certificate of the treasurer or other proper officer. certified by the Secretary of State of the state where the corporation is domiciled. such minutes to be certified by the clerk or secretary of the company. "(c) By-laws.) "Corporations desiring the trust company to act in either of these capacities (transfer agent or registrar) should submit the following papers.. of all votes. by railroad commissioners formal evidence of such approval. by the state is necessary in any form e. . "(b) Minutes of the organization meetings of the stockholders and directors of the company. and generally of comIf approval — pliance with all conditions precedent to the issue.— Suggestions to Corporations Desiring the Services of a Trust Company ister as Transfer Agent to Reg- Transfers of Stock (Extracts from booklet published by the Old Colony Trust Company of Boston. both of stockholders and directors. which was issued under each of such votes. Additional papers will be called for if required: "(a) Certificate of incorporation of the company. g. similarly certified. authorizing the issue of stock of the company. stating the exact amount of stock outstanding. "(d) Copies. showing compliance with the necessary formalities to make the incorporation legal.

is made an error was made in issuing the the transfer agent should be informed of the 3." Suggestions About Stock Transfers (Extracts from booklet published by the Old Colony Trust Company of Boston) 1. if the law of the state permits payment to he made otherwise than in cash. facts. must be some way satis- by guarantee. If certificate. he or his duly authorized attorney should sign the transfer exactly as the certificate out. "(h) List similarly certified of the officers and directors of the company. either in the form of a certificate of the treasurer to payment in cash at par. of some Boston or New York stock exchange house or some well-known bank or trust company. or. This will usually be of the certificate. verified in when unknown. evidence the case. "(f) Copy of the form of stock certificate which is to be issued. with sample signatures of such as may sign certificates. then satisfactory proof that payment has been made in compliance therewith.TRANSFERS 497 "(e) If the stock that such is is issued as fully paid. Signatures of stockholders on stock transfers. and which the trust company is expected This should be submitted for approval before to sign. Do . or by acknowledgment before a notary public under seal. also vote similarly certified appointing the transfer agent and agent to register transfers of the company. If the holder's name is rightly given on the face 2. it is engraved. "(g) Vote of directors certified as in (b) approv- ing the form of stock certificate. factory to the transfer agent. without alteration or enlargement.

use her own In case of a change out to the correct the stock certificate to the filled name by marriage." 6. If assignment is filled out erroneously. and the street or post-office address of the transferee. of Avoid using diminutives. Certificates issued to a minor or an insane per- son should bear the guardian's name. for example.498 TRUST COMPANY LAW not the make corrections on the face of the certificate. in the transfer space on the back of the 4. the one title "Miss" or "Mrs. 7. if It is essential to leave the attorney space is provided. send transfer agent with the transfer name. minor (or incompetent). Termination of the guardianship should be shown certificate by a from the court. alterations should be legible. birth certificate." If a transfer is desired of stock so held. to individuals. "Mrs. In transfers to Christian name. formerly Mary Jones. Christian name. under guardianship of Henry Jones. or other satisfactory evidence. leaving the original writing not use erasers of any sort. "John Jones. . should give the complete legal 8. use the full transferring In 5. made in ink only. not her husband's. writing out the number of shares to be Do Enter so transferred. Mary James. a recently certified copy of the guardian's appointment should be shown. certificate the full name of each person to whom the stock is to be assigned. and. a married woman. together with the license of the court appointing the guardian. blank. signed after this manner." having the signature properly verified. if the transferee be a woman. if such license is necessary under the laws of the state having jurisdiction. Assignments to a corporation or association title.

14. court appointment.TRANSFERS 9. guard- and attorneys should not transfer to themselves individually. and proper evidence of the trustee's creating the trust appointment should be exhibited. Transfers by attorney must be accompanied original the or a notarial copy of the power of by attorney. 12. administrator or executor. a majority should sign. can not be made without license from the court or the con In every case the instrument of all the beneficiaries. whenever possible. all must sign transfers. of estates which have been in probate over three years. executors. Transfers by trustees. When made Trustees. ( )n certificates issued to trustees the trusl must be fully described. 11. If there is more than one trustee. a certified copy of If there is more than one the will should be shown. and. Such vote or other than the by-law should be certified to by an official one signing the transfer. and evidence should be given that the signa- . and accompanied by a certified copy oi the vote or by-law authorizing the transfer. where a power of sale 10. administrators. is Transfers from corporations or associations officials should be executed by their duly authorized for the purpose. unless such transfers are ians. authorized by the laws of the state when the transfer signed. 13. is not granted by the instrument creating the trust. nor should husband and wife transfer directly from one to the other. Transfers made by administrators or executors must be accompanied by a recently certified copy "i by executors or administrators with the will annexed. the name of the beneficiary should be given. exact reference being made to the will or other document creating the trust.

all The is concurred in by questions con- the members of the conference. The foregoing suggestions are subject to change.. The sidered are answered seriatim and with the conclusions of the conference there clusions are based. and when the power is recent. Prompt notice of any change of address should be given the transfer agent in writing. 15. stating the name of the company in which stock is held. to consider the requirements in report force among the corporations represented. etc. or citation of the authorities. certificate possible. inheritance and stock transfer tax laws may necessitate additional requirements which are not within the scope of this report. mended. . will be returned. 17. the number and number of shares. or is shown to be still in force. and should be considered for guidance Report of Conference of Transfer Agents and Counsel This report since is the result of a Conference of transfer agents and counsel which has met from time to time January 12. in regard to transfers of their stock. is given an outline of the reason- ing. file notice to that effect if with the transfer agent at once.500 TRUST COMPANY LAW is Powers of attorney can be recognized only when the intent of the maker to authorize transfers is beyond doubt. giving. Papers left for record in connection with transfers by trustees. ture genuine. executors. only. If a certificate is lost. 1911. 16. upon which such con- The tions questions considered did not include any ques- under inheritance or stock transfer tax laws of any In addition to the requirements here recomState.

Chief Justice Tanev stated the following rule as to the duty of a company transferring its stock to examine the will under which the transfer is made. toand a certificate gether with proof that the appointment is still in force. The reasons for this requirement are as follows contain an express disposition of the stock. to sell without an order of court. question then actual is. Bank. Taney's Cir. Bank. Bank. Authorities: In Lowrie v. there submitted. Decisions. always gives some evidence as to the testator's domicile and such evidence is of value to prevent action under a probate issue in a jurisdic- The will nearly tion other than that of domicile. will The may create trusts which arise im- mediately upon the payment of all debts and legacies. under which it is improper for the executor to sell the stock until after resort to the other assets (a) The will may (Lowrie (b) v. I. so that the corporation may be under a duty to inquire whether the executorial duties still continue or have been superseded by the trusteeship (Lowrie infra). Transfer by Executors WlIAl PAPERS SHOULD BE REQUIRED? In some 15 stales executors have no power. infra). 310 (1848).: TRANSFERS 501 A. "The the had the Bank at the time of transfer or constructive notice that the executor was abusing his trust and applying this stock . Where this is the ease. Answer: should be exhibited to the Transfer Agent a certified showing its probate and copy of the will the issue of Letters Testamentary to the executor. (c) v. a certified copy of the court order should be Where no order of court is required. Ct.

" Bank was held liable on the ground . yet as it was dealing with an stock executor in his character as such. It was negligence in the Bank not to examine it. when is the deceased. but it did know that this was the property of Talbot Jones at the time of his death. where it is duly registered according to law. and it is chargeable to the same extent as if it had actually read it. to take notice nothing to lead them to inquiry. of course. the obligation must be still stronger upon one who is dealing with an executor concerning the assets of of a registered deed. and as the transfer was made to Samuel Jones as its executor. and there third persons are bound." "The Bank therefore was bound to take notice of the will when this transfer was proposed to be made by one of the executors. This is the doctrine in the English Court of Chancery (4 Mad. And the rule appears to stand upon still firmer ground in this state. * * * Now in Maryland every will of real or personal property if is required to be recorded. it was its In this case the own fault. The Bank by its answer denies that it knew anything of the contents of Talbot Jones' will or of the bequest (of stock) to the complainant. for his character of executor. and there is no proof of actual notice. the law implies notice. for it so stood upon its own books. the Bank must. 190).TRUST COMPANY LAW to his own use. at their peril. and if it was ignorant of the contents of the will and of the specific bequest of this stock. have known that Talbot Jones left a will. of itself. Although it may not have had actual notice of the contents of the will. for now it is considered that every person has constructive notice of a deed for real or personal property. gives actual notice that there is a will open to inspection upon the public records.

Marbury v. This depends upon the statutes of each If there is a statute which expressly prohibits a distribution within a fixed period the corporation should no instance allow a distribution unless. 19 AtL. prior to the expiration of such period. will whether or not a copy has been exhibited.TRANSFERS 503 that a reasonable inquiry and examination of the cir- cumstances connected with the transfer would have shown clearly that the transfer was in violation of the trust created by the will. since the document is on record and after seeing a certified copy the Transfer Office can always obtain proof of its contents. 1890). Under this decision a cor- poration charged with notice of all that appears in the See. If there is no provision in the statutes forbidding distribution or if any in such statute has been construed by the courts as intended only for the protection of the executor. proof is furnished that all debts and prior bequests have been paid. whereas a plain copy will usually be furnished without objection. The committee is clearly of opinion that the corporation has no right to retain a certified copy. To retain a certified copy often involves expense to the estate. Can a corporation safely allow an executor TO MAKE A DISTRIBUTION OF STOCK WITHOUT INQUIRY AS TO THE PAYMENT OF OR PROVISION FOR II. CLAIMS AGATNST THE ESTATE? Answer: State.. Ehlen. 649 (Md. is Comment: tion In this connection there arises a ques- whether the corporation should or may require that a plain or certified copy of the will he deposited in the transfer office. then there is no obligation upon the corporation to inquire as to the . and should be retained in order to complete the record of the transfer. also.

(b) It III. Here there is nothing to indicate that the distribution is in any way wrong. 3d Ed. 59 Atl. proper for an executor to give Steel It is perfectly stock to one legatee and Atchison stock of equal value and Smelters stock of the same value to a third.. if he and the legatees agree to this method of payment of their legacies. J. 1169. nothing on the face of the transaction to impute any to another. must always be presumed that an executor is acting properly and has paid or provided for all debts and prior bequests unless some indication to the contrary appears. See Macy v. § 1232-3. & E. 1170.504 TRUST COMPANY LAW estate. and cases cited in 11 A.. impropriety in the transfer.. Other legatees have no right to object to such a payment so long as the valuation placed upon the stock is proper. Where an executor is making an un- equal DISTRIBUTION TO LEGATEES ENTITLED TO SHARE EQUALLY UNDER THE WILL. There is nothing to compel him to break up each block of stock into as many porThere is tions as there are legatees equally entitled. 586 (N. 1904). Dig. Jessup's Surrogate's Practice. because paid in stock if it is not necessary that legatees should always be paid in cash —they may be the legatees receiving the stock are it. Mercantile Trust Co. 22 Cent. satisfied to accept . IS TLIE CORPORATION PUT UPON INQUIRY AS TO THE PROPRIETY OF THE TRANSFER? Anszver: No. Enc.. payment of or provision for claims against the because (a) There is nothing to put the corporation upon notice that any creditors or prior legatees have any interest in the stock.

except in so far as the state in which the corporation is organized may assert its control over them by reason of its actual power situs at the domicile of the These cases were distinguished in Lockwood v. — in the first further inquiry. 93 N. where he did business and had property. and poration (1913). 6. Y. H. Y. The United States Steel Corporation. Matter of Bronson. S. decided since the above Was reversing L53 N. and in the second upon being satisfied that the domiciliary letters upon which the ancillary letters are decedent. the corporation or at the domicile of the stockholder Plympton v. Answer: A corporation can not letters safety transfer its stock upon any probate and testamentary other than those of the jurisdiction in which the decedent was except that where original letters or ancildomiciled.: TRAN 505 safely transfer ets stock AT THE REQUEST OF AN EXECUTOR APPOINTED IN A STATE OTHER THAN THAT IN WHICH THE DECEASED stockholder was domiciled. 209 N. ( — 144 N. Y... shares of stock have their >1 owner. 375. organized in New Jersey.. Under the general rule that the situs of personal property n lows the domicile of its owner. 1*). 655. Can a corporation — strength of the New York probate.—J. Y. S. 150 N. . V. Stool Corwritten. App. is asked to transfer A's stock on the IV. for example: A dies domiciled in Connecticut where he resided. based were issued at the domicile of the The reasons for this conclusion are as follows (a) Shares of stock can be said to have their situs either at the domicile of only in two possible places. His will is probated in New York. Y. Bigelow. Matter of James. lary letters based on domiciliary letters have been issued — by the state letters in which the corporation is organized such case without may be recognized. 660.

but contrary to any such recognition. nevertheless.. Probate is allowed on the assumption that if a person has property in the State of New York. it is well established that. while temporarily here. because The rule that situs of personal property follows ( 1 ) the domicile of is its owner not only does not sustain. 22 Century Dig. while its no one is compelled to recognize an executor acting beyond the jurisdiction which conferred his powers. The principle is the same where the appointment is made because the person died in the state while temporarily there. those who see fit to recognize him will be protected. & E. at least in any recognition made prior to de mands by a local executor (11 A. § 12). a New York representative may be needed to administer the property or the local affairs of the decedent. presence of property in New York and the necessity that some one be appointed to administer it.506 TRUST COMPANY LAW to control their transfer organized under on the books of a corporation laws (I Cook on Corporations. Enc. or dies in the State of New York. 997. (2) There is no basis for the exercise by the New York executor of any authority over property outside His appointment is based upon the of New York. other rule would rapidly lead us into the utmost confusion and executors bonded on the basis of very small amounts of property' might take possession (c) Any of sums vastly beyond the amount of their bonds. § 2312). We find no authorities allowing this recognition by comity to other than a domiciliary is representative. (b) There recognition in no foundation Jersey of a in principle for the New New York executor ap- pointed for a Connecticut decedent. By the comity recognized between states of the Union and between nations. .

'IRAN 507 Comment: transfer agent As lias indicated earlier in this report. the recital in the certificate of probate and the record of the dividend address.of domicile. so far as the registry and transfer of share-. conferring upon the executor the powers or functions of a trustee. 655. reversing 153 N. i What. therein are concerned and that the situs of the stock was not confined to two possible places— either at the domicile of the corporation or at the domicile of the stockThe plaintiff. that the fact that the Steel Corporation of New Jersey maintained a transfer agency in New York constituted New York the domicile of the corporation. Lockwood Unjted States Steel !orporation. — // the pressly or by implication. the some evidence as to the domicile of the decedent from the recital in the will. The reasons for this conclusion are: always within the power of persons in any way interested in the estate to demand an accounting. Mem. and if the circumstances warrant it. as argued in the above report. If all these are the same. as reported in (1013) 209 N. V. in the to establish the place of domicile. 1' S — . his power of sale as executor need not be questioned whatever the lapse of time since his appoint incut. New York (. V. either ex- to different conditions of fact. they differ.—J. to bring about a (a) It is *The New York Court of Appeals held in this case. supra. it is pretty safe 1" If say that the place named f<»r is the place. 12 and 578 of this book. or if other reason the matter seems doubtful. App. Y. Div. This question calls for different answers will contains no provision. See 21 S N.-). 37. f Answer: First. affidavits or other satisfactory evidence should be demanded (Note. This question case of is before the courts of v. under ancillary letters for a decedent of Bermuda. lapse of time after appointment SHOULD CAUSE A CORPORATION TO QUESTION AN EXECUTOR^ POWER OF SALE? V. who v'as acting holder.*) any. was held entitled to enforce a transfer of stock belonging to the estate in the Nev Courts.

When the is . when he has On the contrary. There is no more reason to assume that he going.508 TRUST COMPANY LAW If they fail to take termination of the executorship. On principle it does not seem that the corporation should prevent duty merely because of his tardiness is him from doing his in doing it. is acting should be made after the lapse of a reasonable time. say eighteen months from Where the two functions of executor and trustee are vested in the same person a formal accounting or transfer from the executor as such to himself as trustee not essential to terminate the powers and functions of the executor and reveal those of the trustee. all that appears when the stock is presented to the corporation for transfer that he is tardily doing his duty. but the function of trustee as distinguished from the ordinary function of executor may arise by virtue of any provision which requires the executor to retain the estate or a part thereof in his hands for the purpose of accumulating or applying income. is In such cases he generally so styled. it would rather seem that the persons interested in the estate have entire confidence in him or they would already have required him to account. Frequently the executor is also trustee. Second. the remedy given them by law. In all such cases inquiry as to the capacity in which he the issue of letters. it does not seem that they would be permitted to hold a corporation liable for continuing to recognize as executor one whom they had allowed to continue in that capacity. to misonly been appropriate the proceeds of the sale after he has been executor for ten years than executor for two years. (b) Since it is the duty of an executor to sell stock and wind up the is estate.

TRANSFERS 509 purpose for which the peculiar powers of an executor are conferred by law has been accomplished. persons dealing with him are put on inquiry to ascertain that the facts and his purpose justify a conBefore the tinuance of the exercise of such powers. lapse of such time it may ordinarily he presumed that he is acting in the ordinary course of administration and the settlement of the estate. Each case. no other inquiry need he made. and is entitled to exercise the powers of an executor. (b) If there are other legacies. STOCK OF AN ESTATE TO BE TRANSFERRED TO AX EXECUTOR INDIVIDUALLY ? . inswer: Securities of the estate should not be transferred into the name he is any case unless (2) there is ( i ) of an executor individually in a legatee under the will and proof that all of the testator's debts ha~cc been paid or provided for. the very securities owned by the testator. May a corporation with safety allow VI. or for ultimate distribution in kind. however. if the will require that the trustee retain as an investment of the trust fund. If after the lapse of a time ordinarily adequate for the settlement of an estate. must he treated on its own merits: For instance. no matter how short a time may have elapsed since the issue of letters. proof that they have been paid or provided for should be required. those powers cease and the powers and functions of a trustee appear. (a) If such executor is sole legatee. special justification for the sale of any of them must be shown. . an executor seeks to exercise powers of an executor as distinguished from those of a trustee.

(d) Where there are several executors and that one to whom the stock is to be transferred does not join in the assignment. proof should be required either that there is being transferred to him only his proportionate share of the particular sort of security. the that of a sole executor. the transfer may be made upon proof that debts for. and other legacies have been paid or provided all (c) Where executors are required to sign. I. together with proof that the appointment is in force. his signature as surplusage and transfer may perhaps as if he be regarded made had not signed with his co-executors. still If the administrator is appointed in a state to where executors and administrators have no power . situation is the same as Where not re- the executor to whom the transfer is made is quired to sign. B. or that all other residu- ary legatees assent to the transfer. Transfer by Administrators papers should be required? to the transfer What Answer: There should be exhibited agent either the Letters of Administration or the customary short certificate shozving the issue of such Letters. A The inquiry required of the corporation should be such as to show that the transfer is in accordance with the provisions of the will. transfer by an executor to himself would seem to put the corporation upon notice and to require some inquiry under the rule in equity that such acts of a fiduciary by which he benefits are prima facie voidable.510 TRUST COMPANY LAW (c) If such executor is one of several residuary legatees.

There is no ground. or he securities pro rata. II. for challenging a distribution after the expiration of the statutory period. Can a corporation safely allow an adm 1 i n ISTRATOR TO TRANSFER ITS STOCK UPON A DISTRIBUTION W [THIN T E STATUTORY PERIOD ? 1 . this cannot safely be allowed statutes prohibit a distribution. MAY IT BE ALLOWED WITHOUT QUESTION ? Anszvcr: Yes. EXPIRATION OF THE STATUTORY PERIOD. then a distribution may be allozvcd. The administrator may into cash either convert in all the assets and distribute the cash accordance with the interests of the various heirs. to wit. or he may distribute the may pay some in cash and some . either on principle or precedent. and his actions are presumed to be proper unless there is something to put the corporation on notice. the administrator appears to be making AN UNEQUAL DISTRIBUTION. On its face it appears to be exactly what the administrator ought to do. a certified copy of the court order should be submitted.TRANSFERS 511 sell without an order of court. IS THE CORPORATION REQUIRED TO DEMAND ASSURANCES THAT THE UNEQUAL IV. the If the statute is merely for the protection of the administrator against being compelled to account within the statutory period. Inswer: 'The rule here is the same as in the case of if an executor. When the distribution is made after the III. If DISTRIBUTION OF ITS STOCK ASSETS ? IS EQUALTZFD FROM OTHER Answer: No. in which case it is the only document that need be required.

there is Does lapse of time make it advisable for a CORPORATION TO QUESTION AN ADMINISTRATOR'S POWER V. This is governed by the same principles that were stated in considering the question of an executor ap- pointed in a state other than that of the domicile of the decedent or the corporation. a corporation safely allow stock of an estate to be transferred to an administrator individually? Answer: Securities of the estate should not be transferred into the name of an advinistrator individually in any case unless he is one of the next of kin and there is proof that all of the decedent's debts have been VII.512 in securities. nothing to put the corporation upon inquiry even he appear to be dividing the stock unequally or though is giving it all to only one of the beneficiaries. or functions of a trustee under the terms of the The reasons given in that case apply equally to this. OF SALE? Answer: No. HAS THE ADMINISTRATOR THUS APPOINTED A RIGHT TO TRANSFER STOCK IN A CORPORATION ORGANIZED IN A STATE OTHER THAN THAT IN WHICH THE LETTERS WERE GRANTED? Anszver: No. is May the sole next of kin. VI. The rule here should be the same as that of an executor in the case who has no powers will. Where letters of administration have BEEN ISSUED IN A STATE OTHER THAN THAT IN WHICH THE DECEDENT STOCKHOLDER WAS DOMICILED. TRUST COMPANY LAW Since all of these courses are proper. no . (a) If the administrator other inquiry need be made. paid or provided for.

MAY THE CORPORATION ALLOW HIM TO SELL STOCK UNDER SUCH POWER? Answer: No. The power to invest. a trustee is given power to invest. Garesehc v. and . If the trust instrument is not recorded. at 46. 60 L. 558 at 561. proof should be required cither that he is transferrin!/ to himself only his own propor(b) If the administrator is tionate share of the particular sort of security. unless there arc other clauses or some special circumstances which would make the power "to invest" sufficient to create an implied power of sale. 633 at 635. Stark. IV. or that all the other next of kin assent to his act. iyi. either express or by implication. standing alone. a copy should be exhibited and a plain copy with the transfer agent. hovering Company. clearly does not carry with it a power of sale. T. II. the original should be shown to and a copy filed with the transfer agent. See Halt v. The reasons individually. 12 Misc. Halloway. Halloway v. Transfer by Trustees papers should be required? If the trust What Answer: certified filed instrument to is recorded. Ilagaman. R. I. for this conclusion have been stated already under the question of transfer to an executor C. 106 Fed. 48 S. Reasons: (a) The conclusion that the word "invest" does not in general include a power of sale is based upon the principle that a trustee ordinarily has no power of sale unless such power is given him in the trust instru- Where ment either expressly or by necessary implication. See Geyser-Marion Gold Mining Company v.TRANS ll R! 513 one of several entitled to share in the estate.

where the power to invest would seem of necessity to carry with it a power of sale. Wearne. C. 20 S. 223 (Ky. in either case impossible for the trustee to exercise the power to invest and reinvest without a is sale of the stock. 32 Atlantic 1089 (Pa. 72 (N. 1900) for and against Nczvsom. . however. that one exercise exhausts the power if it rests on the mere presence of the word "invest. The power certain specific securities to constitute the trust res cannot be limited to the investment of securities as they mature. Richards. 3/ 5\ IV.514 TRUST COMPANY LAW a dictum to the same effect in the opinion in Duncan v. E.. 1893) might be considered as an authority for implying J I such a power. One cannot or its in- vest or reinvest shares of stock. There are one or two decisions which look the other way. Money equivalent the only thing that can be invested and reinvested. Trustee. one situation. there would seem to be implied a power to convert once the securities in cash and invest the proceeds. Crawford v. Otherwise. III. Jandon. 13 'allace 163. the words have no meaning at all. Where a trust is created by designating (b) There is and a power or direction "to invest" is conferred upon a trustee. 1905) . 1894). but they seem of insufficient authority for the recognition of any such power. It seems. however.. for that is a duty which the trustee must perform in any event. E. Eads." a trustee has power "to invest AND REINVEST" MAY THE CORPORATION ALLOW HIM TO SELL STOCK UNDER SUCH POWER? Answer: Yes. C. Possibly Ycrkes v. 50 5*. 597 (N. They are: Ozvslcy v. Where Whether stock stands in the name of the decedent it is or has been purchased by the trustee.

.TRANSFERS 515 Therefore the exercise of the power to invest and rein It is no answer vest involves a conversion into money." and a number of decisions sustain the implication of a power of sale from the power "to manage and control. Y. if enumerated among the trustee's powers the "to By way of comment it may be remarked that power to manage is often coupled with the words control. Benedict. />. Weber. however. since the law alone implies a power to invest cash received and later to reinvest it if it again comes in. the testator's intent to preserve the particular investment would appear to be controlling.. a power to manage might imply a power to sell. P. 484./. therefore the power "to man age" stocks would appear meaningless if it does nol imply a power to sell. it implies a power of sate. Dillaye v. . ^r N. If." Even then. 193. Commercial Hank. 26 1. Were that so. the word is applied to specified securscribed as ities. words apply only to moneys received on creation of the trust or from the maturity of invesl ments already made. 285. . Where the So long as stocks are retained no other action is ordinarily required than the collection of dividends and the exercise of voting power which would hardly be de- management. IV.o } . affirmed . even though it compels the abandonment of the ordinary meaning of word "manage. to say that these trustee is given general POWER "TO MANAGE" THE TRUST FUND. )'. Washburn v.. 345." See Spencerv. 163 X. the words would be useless. IS THERE AN [MPLIED POWER OF SALE? Answer: If the power to manage is general and is applied to a fund. if attached to the trust fund the as such or generally.

657. Where vestment IN ALLOW II 1M TO SELL THE STOCK? Answer: This situation has two a trustee has an unauthorized inSTOCK. where sale. 64 Hun 1. — expressly given a power of first. Y. power of express has an the trustee and to invest the trust All the reasons which lead to the conclusion that such a sale should be permitted even when the trustee has no express power of sale are more than ever cogent in case the instrument gives a power of sale. C. it would seem that the words. where the trust instrument does not expressly aire the trustee power of sale. second. and. Where the trustee has no express power of The law imposes upon the trustee a duty to dispose of securities which are not proper trust investments as promptly as possible and all that appears upon a sale of stock by a trustee ity is who has purchased it without author- an apparent intention to do what the law requires him to do.516 TRUST COMPANY LAW V. B. On principle it seems that the corporation should facilitate the doing of what the trustee is by law required to do. other 138 N. CAN THE CORPORATION SAFELY different aspects.. affirmed General Trusts Co. In trustee has an implied power of sale under such circumstances in order to enable him to convert improper & securities into cash (b) sale. In both cases the trustee is the corporation can safely allow a sale of its stock on the following reasoning: (a) sale. if the corporation should pre- vent a sale and the trust estate should sustain a loss by reason of improper investment. v. Where fund properly. it seems probable that Toronto the corporation would be liable for the loss: Q. . In fact.

Transfer to and by Life Tenants In CASE OF TRANSFERS OF STOCK TO PERSONS A LIFE INTEREST THEREIN SHOULD THE STOCK BE REGISTERED IN THE NAMES OF SUCH PERSONS WHO HAVE ONLY "AS LIFE tenants"? Answer: Yes. As a general rule the interest of a life tenant is a very limited one and he is entitled only to income and has no power of disposition over the property. Transfer by Guardian GENERAL RUGULATIONS SHOULD A CORPORATION ENFORCE I. especially in New York. have held that the terms of the will may indicate such an intention on the part of the testator as to warrant the executor turning over the property to the life tenant (Smith v." the interests of the remainder- man are protected. 64 N. W'llAI upon sidle laws that appointed. E.-. Y. Nevertheless.rRANSFERS M7 I ). Van Ostrand. The authority of an executor to transfer the property to the life tenant is always one which may be doubted. because in any attempt at transfer of the stock bv the life tenant he will be allowed t<> . if the corporation insist. Whether that be the case or not. It it taining the lazv of the slate in seems unwise to act without ascerwhich the guardian was would seem clear that the corporation cannol safely allow a guardian to exercise any powers greater than those given him by the law of the state under which he is appointed. on registering the stock in his name "as life tenant. I..N REGARD TO A TRANSFER OF STOCK BY GUARDIANS? Answer: Powers of guardians depend so much I. the courts. 278).

The remainderman can make a case merely by proving the transfer and the corporation must proper assume the burden of proving that the transfer was perhaps years after the transfer was made. may If be) after the name of the life tenant. SHOULD THE STOCK NEVERTHELESS BE REGISTERED IN HIS NAME "AS LIFE TENANT" AND NOT IN HIS NAME INDIVIDUALLY? Anszvcr: Yes. The limitations of this . treated exactly like a trustee. there takes place at that time an extinction of the remainderman's interest which amounts to a conversion unless the action of the life tenant is within his rights.518 TRUST COMPANY LAW exercise only such powers as he can clearly show to be is given him under the instrument. is If the stock registered in the name of the life tenant individually. he seems best that the stock be issued with the words "Life tenant under will of John Doe" (or otherwise' as the case II. In case the life tenant makes no disposition of the — stock there identifying may it be much difficulty after his death in for the remainderman. It In other words. issue a certificate life The corporation should not dividual which might mislead by stating that the tenant is the in- owner of the stock. In addition to the requirements here recommended. the life tenant is expressly given a POWER OF SALE UNDER THE INSTRUMENT CREATING HIS ESTATE. inheritance and stock transfer tax laws may necessitate additional requirements which are not within the scope of this report. The Committee again calls attention to the fact that the questions above considered do not include any questions under inheritance or stock transfer tax laws of any State.

. For transfers to committee of property. Certified copies of court orders or of appointment or qualification of fiduciary should be kept on file in all cases as should waivers or consents respecting inherit- ance tax. heritance Tax Laws.II RS 519 report have fers to nevs in als<> precluded any consideration of transand by corporations. Burns and have been adopted by the Columbia Trust See "Trust Companies" Company of New York. Magazine for June. nished with an uncertified copy of the will or a trust agreement. New York waiver and waiver of the State in which the company is (Look up "Summary of Inincorporated. If we are furwill. from a decedent or otherwise. guardian. it is not neces- sary to retain the certified copy or original for our files. pages 561-563. require a probate certificate of recent date to be kept on file. if required. to be kept on file. transfers to and by attor fact and of questions concerning the authentica tion of signatures. and are permitted to compare it with a certified copy or an original instrument. Instructions to Transfer Department as to Transfer Requirements The following regulations were compiled by John A.") For transfers to trustees. Executors. require a certified copy of the or of the instrument creating the trust. Administrators or Fiduciaries For transfers to executors or administrators as such. 1916. Insist on definite description of the trust and describe it fully on the certificate.

of the stock. look up files and see what papers we have received. Before completing the transfer should have a copy of the will. Transfers from Executors or Administrators For transfers from executors or administrators as such or from the name of the decedent to others than the executor or administrator as such. but trusts are visable to transfer stock to the names of any of the heirs.520 TRUST COMPANY LAW etc. quests are made. as the common with any provision as to the sur- New York State law requires that before title to the property of tenants in common may pass to the survivor.part of the estate owned by the decedent and the conse- quent probate of his estate. in the will.. and tax waivers. probate certificate dated not more than sixty days prior to the If no date of transfer in question. will. but it is usually satisfactory to us to have the . but do not refuse to issue stock in any name without referring to counsel. Endeavor to comply with the foregoing requirements before issuing stock. and no trusts are there is no objection to transfers to to the executors or administrators any names other than If specific bequests of the stock are made we can transfer only in accordance with the If no specific beexcept under order of court. the payment of inheritance tax on that . will. No transfers should be made to joint tenants or tenants in vivor. we specific bequest is made created by the individually. it is inadestablished. Transfers to corporations or joint tenants may be made without requiring anything except a name which will leave no doubt as to the status of the registered owners. require a certified copy of appointment to be kept on file.

If fiduciary is sole beneficiary and the time for filing claims against the estate has elapsed we may accept letter from attorney for the estate or affidavit of fiduciary stating that the time for filing claims has expired and that no appeal is pending with respect to the order of his appointment and that or provided for. providing power of sale is given to the executors under will. unless the stock is specitically bequeathed to them by the will. or a certified copy of a final accounting showing the stock in question to be part of their share of the estate. all debts have been paid Transfers from Trustees. executors or guardians. an heir or a beneficiary named in a trust. In the same manner implied that all . We are not obliged to con- cern ourselves respecting inheritance taxes imposed by the State in which the decedent died. Executors or Guardians Before making transfers from trustees." and we should accept their acts only when unrestricted by the State in which they have qualified. the extent of their authority should be looked up in "Stock Transfer Guide. or the State in is which the company in ques- incorporated. the power of by execu- implied.TRANSILKS 521 stock transferred to the name of any person other than the executor' or administrator personally. We are advised to make no transfers to executors or administrators individually. it is In the absence of any specific is limitations. In the absence of sale any provision prohibiting tors is it. implied that one executor has power to it act for all. or we are fur- nished with a court order authorizing the transfer. unless it is New York tion State.

to fail to qualify as executors. We must in no case name of fiduciaries concerning which files refuse to make transfer except at the direction of the company for which we act. It is usually advisable to company's counsel in the matter does not seem to us to be in accordance with the best practice.522 TRUST COMPANY LAW Care must be exercised in transferring stock under a will in which trustees are appointed. we should where persons are named both as executors and trustees for one or more of them are still acting. When the is presented for transfer standing in information in our we have no and claim is made that the trust is made for convenience only and is not expressed by any written agreement. General Requirements Transfers by corporation should be signed by the proper officers under seal. If the advice of the to liability. it may be desirable to refer the matter to our own attorneys. but they should all act as trustees unless other courts. and a certi- . to see that the executors have not been replaced by the trustees. and that they are signing in accordance trustees must act. lest we subject ourselves refer to counsel. we should take no action until we are satisfied as to the facts. and we should be furnished with a certified extract from the by-laws showing what officers are authorized to assign securities. with the will. persons are substituted by the is sufficient A court stock order authority on which to act without requiring a certified copy of the will or any other instruments except waivers. If the executors about 12 to 18 months after the probate of named are not also named require proof that the executors It is possible as trustees. is The usual time for this substitution to take place the estate.

Copies may be substituted in for the original or certified copies in any other cases. Certifications by the officer authorized to sign which are not attested by some other officer are not satisfactory. Towers of attorney should be of recent date or bear the statement of a responsible party or recording officer that they are still in force and should nd be accepted in any . instead of etc. Transfers Made by Attorney-in-Fact On transfers made by an i attorney-in-fact we should be permitted to examine the original instrument or copy certified by recording ifficer in the case of general p< >wers of attorney. unless when dated us. Watch carefully that statements are the accepted saying that stock was "held by " " at the time of the firm's assignment. and that the by persons satisfactory to bankrupts had no interest in the stuck at that time or at any time not since. "Owned by we should be In the absence of this statement fur- nished with a statement from the receivers or trustees bankruptcy that they have no interest in the stock or the certificate should be endorsed by them in the in : trust capacity. Stock standing firms that in the name of brokers or brokerage we know to be insolvent or bankrupt should not be transferred even ure. the original should remain files in our files. that prior to their fail- we are furnished with a statement guaranteed someone other than the firm in question or their receivers was the owner of the stock at the time of their bankruptcy.TRANSFERS ficd extract 523 from the minutes showing the election oi such officers. but in the event that the power of attorney covers only the transfer of stock in question.

but not a specified time. have the bond provide a reasonable length of time. The description of the respects. Guarantees of firms who have changed their name or dissolved may be accepted Guaranif assignments are dated prior to such change.524 TRUST COMPANY LAW event after are informed of the death of the maker. or twice the market Bond to indemnify the value of the stock if above par. . out-of-town banks should be verified at the office of the New York correspondent. If possible. must be refused in all Duplicates in lieu of lost or destroyed certificates may be issued only upon bond of indemnity of a responsible Surety Company for twice the par value of the stock below par. securities lost should be accurate in all and the usual five-year term clause in the bond should be stricken out so that the period over which the bond is to run is bond of indemnity usually requires immeunlimited. Endorsements not known to us should be guaranteed by banks having New York correspondents or by New York Stock Exchange firms only. adopted by the trust company. and in all cases it is safer to have the form approved by counsel. tees of firms that are insolvent cases. Sufficiency of Surety Bond Great care shald be exercised in passing upon the sufficiency of a surety bond. except in cases we where we have been authorized to accept other guaranSignatures of tees by the company for which we act. which might lapse and render the bond It is advisable to follow the printed forms invalid. A diate notice to the Surety Company. Trust company whose stock we transfer if the market value is Company and the Registrar.

Addresses should be changed only upon written request of the company. Dividend orders must he signed by the holders of record and their signatures properly authenticated. Transfer Taxes New York State transfer tax at the rate of two is cents (2c) per $100 par value required on all transfers.WSFERS Authority of the stock. except transfers from decedents to their executors or administrators or from trustees to substituted trustees. We should in no case refuse to make transfer without such advice. and if stock on which such notice has been given should be presented to transfer. 525 New York Stock Exchange must be obtained before issuing duplicate certificates for listed The Stock Exchange should be provided with certified copy of a resolution of the company authorizing the issuance of a duplicate certificate. we should advise interested parties at once and make no transfer except by advice of counsel. Stop Transfer and Dividend Orders Stop transfer orders should be entered on our books only upon written request of the holder of record or of responsible firms. . All questions arising with reference to New York. and our statement that such certificate has been issued so that the)' may authorize the resignation of such duplicate. or at the rate of two cents (2c) per share on stock having no par value. individuals or company. the holder of record or banks or stock exchange firms. except where dividends are to be paid to responsible banks for account of the holders of record.

' " . published by the respective States and questions regarding Federal tax in the 'War Tax Service.526 TRUST COMTANY LAW Pennsylvania or Massachusetts taxes should be looked up in the rulings of the State Comptrollers.

) file a copy of its charter with the corporation commission and publish a copy of the same. Rulings and Opinions Relating to the Admission of Foreign Trust Companies to Do Business in the Various States Alabama Code of Alabama.Laws. shall before entering upon. territory. shall use the word "trust" as a part of the corporate name. appoint a . or occupation in this state" (Revised Statutes. is discussed in section 133 of this book. section 3530. or any foreign country. do. of incorporation. Application of these provisions to a foreign trust company. in this state. the acting as mortgage trustee. provides that no trust company which has not complied with sections 3528 and 3529. or transact any business. 1913. doing or transacting such business. Arizona "Any company incorporated under the laws of any other state. general foreign corporation laws (Sections 3640-3651) requiring the filing of a copy of the arti- The cles appointment of a process agent. 2229 ct seq. enterprise. 1907. apply in terms to every foreign corporation doing business in the state. making such companies amenable to the banking laws and requiring certain amounts of paid-up capital. Par. enterprise or occupation. payment of certain fees. which shall carry on.

as co-trustee with any qualified trust company organized and doing business under the law of this state. specific provision in regard to foreign trust companies acting as trustee for The general laws of Arkansas 20. 313. outside of the state of California.) The general foreign corporation law (Act Acts of 1907) applies tions. it would be an "isolated transand therefore exempt." (Letter of Nov. exeNew York. for the following purposes with this state the "No ." action. Martin v. 156 Pac. Arkansas "The banking law has no parties in this state. from Bank Commissioner. process agent. in terms to all foreign corpora- California Section 90 of the Banking 1909." Even if it were. Prosecution of such a suit not "doing busi- ness. would prevail in matters of this kind. provides as follows: Law. 87. City of Little Rock. foreign corporation shall have or exercise in power to act as trustee under any mortgage. 1916. or other instrument securing notes or bonds issued by any corporation. Bankers' Trust Co. approved March 1. The only activArizona was a suit for foreis closure. State Banking De- partment. (1916). and pay certain fees. deed or trust. not required by that fact alone to qualify under this law. The trust deed in this case cuted and acknowledged in ity of the trust company in was accepted. trust A New York bond is company acting as trustee of a corporate issue with respect to property located in Arizona.528 TRUST COMPANY LAW etc. excepting that a foreign corporation may be authorized to act.

and to take up 5 ( ) and cancel coupons representing such interest payments. 1913. 1913. 175. (6) To redeem and cancel bonds when called for redemption or to pay and cancel bonds when due. guardians. (7) The certification of registered bonds for the purpose of exchanging registered bonds for Amendment approved May 6. directly or indirectly. etc. (3) To deliver refunding bonds in exchange for those of a prior issue or issues.1 i iK- 1 K. nor have or maintain an office in this state for the transaction of. administrators. or other personal property from any person or corporation or any of the powers specified in section six of this act. except that a trust company incorporated in another state may be appointed "No and may accept appointment and may act in this state as executor of or trustee under the last will and testament of any deceased persons. and receive payment there ( 1 > for. To pay interest on such bonds. and reads in part as fol- lows: foreign corporation shall have or exercise in this state the power to receive deposits of trust moneys. and none other: To deliver bonds. (2) To deliver permanent bonds in exchange for temporary bonds of the same issue. upon giving the bond required in such case of individuals unless waived by the last will and testament making such appointment . p. any such or similar business..N REGULATIONS : _"' reference to bonds secured by mortgage or deed of trust of property in this Mate.) ( Section 7 pertains to the powers of executors. coupon bonds. Stats. or to exchange registered bonds for coupon bonds. or transact. securities. or coupon bonds for registered bonds. (4) To register bonds.

provided. shall at once mail the papers so served to the home office of such corporation. the court having jurisdiction of such executor or trustee in said proceeding may in its discretion. and that for any violation of this proviso. further. and said superintendent of banks. and provided. shall be the attorney of such foreign corporation qualifying or acting in this state as such executor or trustee. for the time being. directly or indirectly. provided. that such superintendent of banks. manager or trust officer of said corporation. further. and it shall be the duty of any such foreign corporation so qualifying or acting to file in the office of said superintendent of banks a copy of its articles of incorporation. when any such process is served upon him. together with the postoffice address of its home office. or of the statute chartering such corporation. any branch office or agency in this state. that similar corporations organized under the laws of this state are permitted by law to act as such executor or trustee in the state where such foreign corporation was organized. revoke the right of such foreign corporation thereafter to act as executor or trustee therein. any business as executor or trustee therein. that nothing in this i . directly or indirectly.530 TRUST COMPANY LAW and by taking and subscribing an oath for faithful performance of such trust by the president. that no foreign corporation having authority to act as executor of or trustee under the last will and testament of any deceased person shall establish or maintain. affecting or relating to the estate or property represented or held by such executor or trustee. or any act or default of such foreign corporation in reference to such estate or property. or shall in any way solicit. and provided. upon whom process against such foreign corporation may be served in any action or legal proceeding against such executor or trustee. certified by its secretary under its corporate seal. vice-president. secretary. and a duly executed appointment of said superintendent of banks as its attorney to accept service of process as above provided.

the not form a part of belonging to its business in this or corporation assigned May approved 6.) Section 62 here referred to "Any three or more persons a corporation is may as follows: associate to form under this act for the transaction of any lawful business. unless empowered so to do by some general or special law of this state. 1913 Stats. to transact in this state the business of a bank. in this state for its lawful uses and require. or water com- . telegraph or telephone company. 81. gas. except for the purpose of carrying out and renewing. in this state. Sec. state. sections 916 et seq. 1913. however. by way may real estate and other property as it due debts oi of foreclosure or otherwise.) apply terms the si to every foreign corporation doing business Connecticut General Restriction. trust company. insurance company. electric light. Such corporation shall not have power. engage in its 1903."' (Chap. the business charter or the laws of the state under which it was organized. railroad or street railway company. in payment such corporation. 194. 137.I ( IRE1GN REGUL VTIONS 531 act shall limit or affect the righl of any foreign tion doing a banking business in this state. sell and convey and such purposes. p. surety or indemnity company. Public Acts of Comm. Amendment moneys | . and personal estate mortgage. but no foreign corporation belonging to any of the classes excepted in section 62 of this act shall authorized by or continue. corpora to lerid of such corporation which do within this state.)" Colorado The general foreign corporation laws in in (Revised Statutes. savings bank.existing contracts heretofore made. hold. "Any foreign corporation may real purchase. lease. deposits or assets of Mich money. 1908. building and loan association.

Chap. 2. 1.) this state." (Public Acts of 1903. Chap. ." Chap. may qualify and act as such executor or testamentary trustee in this state. and shall apply to all wills and codicils which have been or (Public Acts of 1903. Sec. 4. Sec. and named as executor or trustee in the will of any resident of this state." "The court of probate having jurisdiction may. shall hereafter be executed. but shall have power to transact such business in any state or territory of the United States or in any foreign country. 3. .) "This act shall take effect from its passage. upon whom all process in any action or proceeding against it may be served and in such writing such corporation shall agree that any process against it which is served on such secretary shall be of the same legal force and validity as if served on the said corporation. unless otherwise provided in such will. and that such appointment shall continue so long as any liability remains outstanding against the corporation in (Public Acts of 1903. 131." (Public Acts of 1903. 31. Sec. "Any foreign corporation authorized by its charter to act as executor or trustee in the state where it is chartered. in the discretion of said court. Chap." Power to Act as Executors or Trustees Under Wills. require said corporation to give bond for the performance of such trust. 131.) "No such corporation shall act in such capacity until it shall have appointed in writing the secretary of the state and his successors in office to be its attorney.) Delaware The general foreign corporation laws requiring a file foreign corporation to a certified copy of its charter. Sec. 131. if not prohibited by the laws of such state or territory or foreign country.532 TRUST COMPANY LAW pany or of any company requiring' the right to take and condemn lands or to occupy the public highways of this state.

IX. Our laws relative embodied in our Code. see also Constitution. 1) and require the filing of reports with him (Sec. of course. sections 372S to 3795 . Sec. 10. Vol. XXII) subto companies "doing business in this state" supervision by the Insurance Commissioner (Sec. Sec. 2). 106. Chap. 46. ject trust 330. Chap.) Florida "No corporation organized to conduct either a banking or trust business or any part of such business shall engage in either the banking or trust business or any part thereof unless or until such corporation shall have complied fully with the banking and trust laws of this state and shall have been authorized by the Comptroller of the state of Florida in the manner provided by law to engage in any such business in this Provided. Sec. 5. applies in terms to (Laws of 1915. to would be necessary for them to trusts is comply with the laws of this state in reference thereto.) The Banking Laws (Chap. (Vol.FO&ElGN REGULATIONS in 53o name its authorized agent the state and file a sworn all statement of assets and foreign corporations. Chap." 6426. INS. cure a national currency. that this section shall not be construed as applying to banking associations organized within this state pursuant to the provisions of Congress to prostate.) (Laws of Florida. Georgia "I trust know of no law that would prevent a foreign as trustee of property located in it company acting this state. liabilities. XXIV. Art. In order for them to do so. Trust companies "doing business" in the state are also required t<> pay a franchise tax.

states that . 1881. affi- resolution of directors assenting to service of process upon the auditor of state. relate in terms to "foreign corporations not created under the laws of this state" doing business in the state. 1916. Nov. Revised Statutes. interrogatories davit. Nov. Illinois Foreign trust companies cannot act as trustees of property in Illinois. It is necessary to qualify as a corporation through the Secretary of State's office and then apply to the Auditor of Public Accounts at Springfield.) Idaho There are no specific provisions for the authori- The zation or admission of foreign trust companies. unless they qualify with the Banking Department under the Trust first Company foreign Act. (Sections of Burn's Annotated Statutes) requiring the filing with the Secretary of State of an application. as amended by laws of 1915. chapter 124. general foreign corporation laws. 20. the payment of certain fees. 23. quoting Assistant Attorney General.. Revised Codes of 1907. building and loan com- panies and surety companies. a copy of the charter. and answers. applies in terms to foreign corporations for profit. other than insurance. for authority to accept and execute trusts. 1916." (From letter of State Treasurer. section 2792. etc.) Indiana The general foreign corporation laws 4085 et seq. A deposit must be made.534 TRUST COMPANY LAW inclusive. Section 2988. (From letter of Auditor of Public Accounts.

See also Shirk v. (1886) 27 Fed. 30 N. 439. 131 Ind. 21. Rep. 1916: "I have your letter of the 17th inst.. shall remove from the state. then his rights." in a case involving an individual non-resident trustee. serve before taking title? (3) Are there any prerequisites for a foreign trust company entering upon the duties of an executor. a bona fide residenl of the stair of Indiana. and the proper court shall appoint his successor pur- suant to the provisions of the act to which this is supThis act was held to he unconstitutional plemental. Co. W. This decision Roby v. Smith (1891).FOREIGN "It shall be unlawful for REGULATIONS 535 corporation to tee in ing- any person. 342. E. Co. v. guardian or conservator of an estate located in Iowa? In reply the following was received tinder date of Nov. 31 Am. mortgage. A. what prerequisites must it ol. or nominate or appoint any person as trus- any deed. such trustee. (1892). R. powers and duties as such trustee shall cease. Chicago. 15 L. 1093. La Fayette Iowa A letter was addressed to the Auditor of State. to act as such And if any person. administrator. R. Des Moines. at the time. or other instrument in writ(except wills) for any purpose whatever. 855. asking the following questions: (1) May a foreign trust company act as trustee of property located in Iowa? (2) If so. 146. 792. 52 Fed. association. after his appointment as trustee. and have sub- . etc. quoted with approval a statement of constitutional jections "1. St. who shall not be. from Farmers Loan a case involving a foreign trust company. & T. and it shall be unlawful for any person who is not a bona fide resident of the state.

of course. are in accord with our laws and the general policy of conducting business as deduced therefrom. 1332. the appliin organized may be tic corporation principle that. determine that the shall board If the Statutes. "To render it certain that foreign corporations. and there must be set forth in the application the full nature of the business in which (Sec. in subject to the well another state or sovereignty they must conform to its laws and be in accord with the domestic policies of the one giving them protection for the time being.' (Sec. an application must be first submitted to the charter board asking permission to enter the state. I wish to make the following observations "The general rule of law is that a corporation has no right to exist beyond the limits of the sovereignty by which it is created. who advises that a foreign trust company. must organize under the provi- sions of the Banking Act.: 536 TRUST COMPANY LAW mitted the same to our Attorney General. corporations organized under the laws of one are permitted to exercise their functions and transact business in others." Kansas "On the question of the right of a trust company. General the applicant purposes to engage. in its organization. in order to enjoy the privileges of the trust act.) which a domesfor purpose for a organized applicant 'is this state. to be admitted to do business in this state. seeking the right to do business in this state. 1335. it cannot. rightfully be permitted to do business therein. 1905. known when cation shall be granted. organized under the laws of a foreign state. contravenes the laws or policies of another state. "By virtue of the comity that exists between nations and states. "If a foreign corporation.) "But the foreign corporation authorized to do busi- .

oi this act. judicial control. "I think that it' was clearly the intention of the legislature in enacting a law authorizing the organization of trust companies to restrict the operation of such companies to those only organized under domestic laws. commence business until thev have received authority from the bank commissioner. or organized under. 1526. 1907. to to be examined shall not Thev in the same manner as banks. and has complied with the proi'isious of said act. 1905) in the general incortofore or thereafter incorporated poration laws of Kansas might enjoy 'all the privili named' * * * 'by complying with the requirements "The lirst section of the act (Sec. makes it unlawful for any corporation in (not of. or admitted to do business in) the state of Kansas to engage in the business of a trust as defined therein without complying with all of the provisions of the trust company act. 674. General company trust thereany provides that Statutes. "Section 2 of House Bill No. "Section 1538 places trust companies under the supervision of the bank commissioner and requires them ''Section 1528 requires shall receive deposits. which author ity shall set forth that such company has been incor- porated by the state. "From these quotations it is very clear to me that the legislature intended to have the bank commissioner company . and by section 1540 the banking act in a great many particulars is made applicable to trust companies. "The directors must make the same quarterly examinations as those of banks. which keep on hand at all times 25 per cent of the deposits subject to check and 10 per cent of its time deposits.FOR] [GN Rl Gl ! vi [i I 537 to the same provi and penalties except ness in this stale 'shall be . and section 1533 requires a majority of the board to be residents of Kansas.subject sions.' any trust company. restrictions as /herein provided' as domestic corporations. published March 21.

with the statement that the Attorney General then in office was in accord therewith. etc. trust company establishing a branch here? how could the annual examination be made. is there to prevent what company can be admitted at all. or how.) Kentucky Section 571 of Carroll's Statutes. and shall display in a conspicuous place in its principal place of business in Kentucky its name followed by the word "incorporated.538 in the closest TRUST COMPANY LAW touch with and exercise the most rigorous If a foreign trust supervision over such companies. or London. under date of Nov. but we are of the ." (Opinion of a former Attorney General of Kansas. shall at all times have one or more known places of business in the state and an authorized agent or agents thereat upon whom process can be served.. provides that "all corporations except foreign insurance nies compa- formed under the laws of this or any other state. and carrying on any business in this state. 17. or Berlin. will say in reply to Question 1 that you cannot organize a branch trust company in this state.. were being observed? "I think that the admission of outside trust companies to do business in our state would be as clearly against our domestic policy as would be the admission of foreign state banks for the purpose of establishing branches to receive deposits and conduct a banking business. 1915. Topeka." Such corporation must also file a statement with the Secretary of State." "Replying to your letter of November 17th. etc. in a feasible way. 1916. could the bank commissioner know that the various provisions of the acts in reference to 25 per cent of deposits. copy of which was forwarded by the Bank Commissioner. a great New York. or Hong Kong If it did.

"Replying to Question 3. Maine Specifically ration Exempted from General Foreign CorpoLaw. Laws of 1910. "Every corporation established under the laws other than those of this state for any lawful purpose other than as a bank. administrator. Laws of 1911. safe deposit and trust banks" organized under Act 45^ Laws 1902. in writing appoint a resident of the state. savings bank. eign corporations exercising the same rights as similar domestic corporations organized under that The act excludes domestic banking corporations.) Louisiana The general foreign corporation laws 267. 1914. 20.FOREIGN REGULATIONS •^ < ' opinion that your company can act as trustee for prop1 erty located in this state.." (From letter of Banking Commissioner. Sec. Public etc. Nov.) Shall Not Act as Administrator or Guardian.business in this state. or of tution. "No . of an estate located in this com- monwealth. See also Act 193. association or instiincorporated under the laws of this state. section 23) relate to (Act No. the admission of foract. shall before doing. guardian. will say that your company can unquestionably act as executor. trust company. 1. 1916. trust or banking company. Frankfort." 152. etc. The trust powers of domestic companies appear to be confined to "Savings. * * * which has a usual place of business in this state or which is engaged in business in this state permanently or temporarily without a usual place of business there. (Chap.

There are no prerequisites which our statute requires." (Revised Statutes. and also as executor.) Massachusetts person or association and no bank or corporation. and by giving bond and making affidavit before the Orphans' Court that it will properly perform its duties if it is to act as executor. anything in their charter to the contrary notwithstanding." (From 12. or advertise or put forth a sign as a trust company or in any way lates solicit or receive deposits as such. that the foreign trust company must qualify in the usual way by giving bond if it is to act as trustee. shall use in the name or title under "No which his or its business is transacted the words Trust Company.' even though said words may be separated in such name or title by one or more other words. administrator or guardian. Dec. shall act or do business as administrator or guardian. But the provisions of this section shall not prohibit an insurance company authorized in this nrior to the first dav of October in the vear eighteen to hundred and ninctv-nine wealth nor a company do business common- authorized prior to said date to . 48. Whoever vio- any provision of this section shall forfeit for each offense one hundred dollars for each dav during which such offense continues. 1916. administrator or guardian.540 TRUST COMPANY LAW any other state and doing business in this state. except.) Maryland "A foreign trust company may act as trustee of property located in this state. of course. Chap. letter of Attor- ney General of Maryland. Sec. except trust companies incorporated as such in this commonwealth. 85.

Revised Laws.. unless domestic corporation or resident trustee be named as co-trustee. 191 f>. section 6206. 1009." letter of (From Secretary of Banking Department. as the statute has failed to ) "No provide for such companies in this respect.FOREIGN REGULATIONS 541 transact a foreign mortgage business in this from using the part of its corporate name. son not to "Foreign corporation or peract as truster. 23. S.) Minnesota The general foreign corporation law requiring appointment of an agent for service of process in the state.) commonwords Trust Company' as a (Chap." wealth Sec. applies in terms to "every foreign corporation for pecuniary profit" doing business. holding or disposing of property in Minnesota. Michigan Michigan that foreign trust companies cannot enter the state and transact business to any extent. 116. guardian or conservator of an estate located in this state. administrator. filing copy of charter. 1913." "It has been the settled public policy in ing Department. R. Dec. 1. acquiring. Nov. 1916. executor. 3.) Missouri Sec. (General Statutes. etc. There is no statutory provision by which foreign trust companies can be given the power or right to transact any of the functions of (Letter of Commissioner of Banka trust company. Mississippi foreign trust company can serve as trustee. — No foreign . 2859.

situate or being in this state. then by that. 1899. 4372. act he for. real or personal. 1916. guardian or curator must be a resident of the state of Missouri that if a resident is appointed in such capacity and becomes a non-resident. Jefferson City. Sec." (Laws 1895. p." The general foreign corporation laws. expressly provide that an executor.) Under date of December 27. feits the right to continue in the administration of the trust. 231. whereby any property. Montana Section 3992 of the Revised Codes of 1907 states that it shall be unlawful for any person to use the words "trust" or "trust company" in any corporate title unless such company is organized and incorporated under the laws of Montana relating to "trust deposit security and savings bank corporations" or "such business be conducted by a foreign corporation which has fully complied with the laws of Montana and is duly qualified and authorized to conduct business in the state of Montana. advises that Missouri courts have repeatedly held. the Bank Commissioner of Missouri. unless a resident trustee shall be a party plaintiff. hereafter in conveyed in trust for any purpose whatever. No suit shall be brought to foreclose any such deed of trust. or an individual citizen of the state of Missouri. S. unless such conveyance there shall be named as co-trustee a corporation organized under the laws of this state. sections 4413 . firm or corporation. and Missouri statutes administrator. and having power to act as trustee and execute trusts.542 TRUST COMPANY LAW corporation or individual shall act as trustee in any deed of trust or other conveyance hereafter made by any is person. R.




to 4419, apply in terms to "all foreign corporations or

joint stock

companies except foreign insurance companies and corporations otherwise provided for, organized under the laws of the state or of the United States, or of any foreign government," doing business in the state.

"In reply to your favor under date of the 18th inst, is no provision of statute authorizing


say that there

a foreign trust



company to transact business in this company organized under the laws of
an executor of a

this state


act as

will or


trator of an estate, but this

only by reason of an

express statutory provision to that

The general

that 'a corporation can not act as an administra-

tor of

this state.'

an estate of a deceased person under the laws of Continental Trust Co. versus Peterson, 107 N. W. 786, 76 Neb. 411." (From letter of Secretary of State Banking Board, Nov. 23, 1916.)

The general foreign corporation laws (Revised
Laws, 1912, sections 1186, 1347-1350, 5024) apply in terms to "every corporation organized under the laws of another state, territory, the District of Columbia, a dependency of the United States or foreign country, which shall hereafter enter this state for the purpose of doing business therein." The Deputy Attorney General of

Nevada advises under date

of Jan. 25th,




that foreign trust companies


act as trustee of prop-

erty located in that state, and as executor, administrator,


guardian or conservator of an estate located "If such foreign trust company enters this state





for the purpose of doing business therein




copy of

its articles

of incorporation with our Secretary

of State and pay the usual fee therefor."

New Hampshire
was addressed to the Chairman of the Board of Bank Commissioners, Concord, asking the


following questions
(1) a foreign trust company act as trustee of property located in New Hampshire?


(2) If so, what prerequisites must taking title?

observe before


Are there any prerequisites for a foreign trust company entering upon the duties of an executor, administrator,

guardian or conservator of

an estate located


New Hampshire?

In reply the following was received from Joseph S.

Matthews, Assistant Attorney General, under date of Nov. 28, 1916: "I would refer you to Chapter 109, Laws of 1915. Section 34 of that act refers particularly to the subject matter of your third inquiry and is in terms as follows
" 'Section 34. No trust company, loan and trust company, bank or banking company, or similar corporation, shall hereafter be appointed admin-

istrator of an estate, executor under a will, or guardian or conservator of the person or property

of another.'


"This section of the act applies to local as well as foreign corporations and appears to make all such corporations ineligible for appointment by our probate
courts to be administrators, executors or conservators.

Corporations, however, organized under the provisions
of chapter 109


be appointed as trustees."






Foreign trusl companies may be admitted to trans act business in New Jersey under ihapter 251, Law- oi These require 1890, and Chapter 35, Laws of 1907. the filing of an application for authority with the depart

ment of banking and insurance,
copy of

a duly authenticated

charter, a report of


condition at the close
last pre-

of business on the thirty-first

day of December

ceding, a depost of securities,
tain fees.

and the payment of


Pamphlet copy of the law


be secured

upon request addressed to the Department of Banking and Insurance, Trenton.

New Mexico
have to say that T do not find anything in the laws of New Mexico which prohibit a foreign trust company from acting as trustee

"Answering your




of property located in





your second inquiry,


to say that a

foreign corporation

not qualified to act as an executor,

administrator, guardian or conservator of an estate (From letter of Assistant located in New. Mexico."

Attorney General, Nov. 21, 1916.)

New York
trust companies in this state arc of the Banking Law, quoted in 223 limited by Section full at pages 326 to 327 of this book.

Powers of foreign

North Carolina
corporation organized under the laws of any other state than North Carolina shall be eligible or entitled to qualify in this state as executor, administra-




guardian or trustee under the

will of

any person

domiciled in this state at the time of his death."

1%, Public Laws of 1915.)

North Dakota

Grunow 130 N. W. 835,


Simonitsch (1911) 21 N. D. 277, the Northwestern Trust Company, a

Minnesota corporation authorized to transact business in North Dakota, is held incompetent to receive letters of administration from a North Dakota court. Revised Code, Sec. 4682, granting corporations the power to act
as administrators, executors,

according to this

decision, limited to domestic corporations.

"Foreign trust companies have the same power in the acceptance and execution of trusts as are now conferred on them by section 9775, General Code of Ohio. "Trust companies must have capital of at least $100,000.00, and before being eligible to transact business in Ohio must deposit in cash or securities with the
Treasurer of State, $50,000.00 if its capital is $200,000.00 or less, and $100,000.00 in cash or securities if its capital is more than $200,000.00. "Trust companies, either foreign or domestic, are not permitted under the Ohio laws to act as executor or administrator but may be appointed as trustees under any will or instrument creating a trust for the care and

management of property. "Each foreign trust company

desiring and intend-

ing to do business in this state shall pav to the Superin-

tendent of Ranks a fee of $50.00 before a certificate can be granted." (From letter of Assistant Superintendent of Banks, Columbus, Nov. 20, 1916.)












your favor of the 6th


for reply.


you make the following inquiries:

" '1. Can a foreign trust company act as trus located in your state? property of tee " '2. s<>, what prerequisites must it observe


before taking


eign trust executor, administrator, guardian or conservator of an estate located in your state?' "In reply to these inquiries, you are advised that
a careful consideration of the law of this state leads
this office to the conclusion that there

Are there any prerequisites for a for company entering upon the duties of an

no existing statute under which a foreign trust company can act in this state. Our trust laws seem to indicate that the trusl

company must he a domestic corporation before acting (From a letter of Assistant Attorney in that capacity." General, Oklahoma City, Dec. 14, 1916.)

Requirements of a foreign trust company doing business in this state are contained in Chapter 354. Laws of 1913. This law does not prevent foreclosure by a foreign trust company which had accepted trusteeship


(Fidelity Trust Co. 1914], 217 Fed 588.) the Attorney General

mortgage before its enactment. Washington-Oregon Corp. v.

The following


an opinion by


G. Sargent, Superintendent

20. 1915. of Tanks. State




of recent date,

In compliance with your oral reauest have examined the question submitted



by you as to what fees should be paid by a foreign trust company which wishes to become trustee for the issuance of bonds in this state, by accepting a mortgage, or deed of trust, to be recorded in one or m< ire counties of this state as provided in Section 24, Chapter 354, page 730, Laws of 1913. "Said section exempts foreign trust companies from the provisions of said Chapter 354 under such conditions as follows: 'Provided, that a corporation qualified to act as a trust company in the state of its domicile may act as trustee for and issue all bonds, debentures or notes issued under the terms of a mortgage or deed of trust, duly recorded in some county in this state and provided, further, that such foreign trust company shall have appointed and shall maintain an agent or attorney in this state upon whom or upon which legal notice or process may be served.' "These provisos follow the provision in the statute that foreign trust companies cannot hold personal or real property in trust in this state, or act as trustee without having complied with all of the provisions of said chapter providing for the organization, regulation and control of trust companies. "In the case under consideration, it appears that the trust company in question is authorized to act in that capacity and receive and hold property in trust in the state of Pennsylvania, and that by taking the mortgage or deed of trust and recording the same in one or more counties in this state, it would be authorized to enter into such relation without complying with the other provision of said chapter, but this does not dispose of the question of fees to be paid for the filing of its copy of articles of incorporation, certificate of authority from the Secretary of State of Pennsylvania, and other papers necessary to be filed in your office in order for it to transact business in this state as a corporation, which business it necessarily docs by becom'






ing trustee and holding properly in this state. We therefore look to the general corporation laws to ascertain the


to this question.

"Section (>727, Lord's Oregon Laws, provides the papers which shall he filed by a foreign corporation desiring to transact business in the .state of Oregon, with the Corporation Commissioner, and the fee to be paid, fixing the same at $50.00, together with the annual license fee due for the succeeding fraction of the fiscal Chapter 381, Laws of 1913, fixes the annual year. license ice for foreign corporations at $100.00. "1 am mindful of the provisions of Section 4564 (a), Lord's Oregon Laws, as amended by Section pro2, Chapter 285, at page 428, Laws of 1915, which vides among other things: " All fees heretofore payable to the Secretary of State or the Corporation Commissioner for the State of Oregon by any hank, hanker, or trust company, shall hereafter be" paid to the Superintendent of Banks.' "But the above provision does not seem to apply
to the case at bar.
effect that the fee to he

answer your inquiry to the charged such foreign trust company for the filing of the papers required to be filed with the Corporation Department is the sum of $50.00, together with the proportionate part of $100.00 for the fraction of the year until July 1, 1910, and the papers to he filed are those provided for in Section 6727, L. O. L. "All papers herewith returned.
"I would, therefore,


respectfully yours,

"Geo. M. Brown, Attorney General."


The general






every foreign corporation doing business

the state.


of 1911,


1.) ]). 710, section person, copartnership, limited copartnership,




or corporation, except only corporations reporting to,

and under supervision of the Commissioner of Banking of this commonwealth, or reporting to and under supervision of the Commissioner of Banking of some other state or commonwealth, shall, in this commonwealth, advertise or put forth any sign as a trust company, or
use the



as part of






vided always, that this act shall not be held to prevent any individual, as such, from acting in any trust capac-

any provision of this section shall constitute a misdemeanor, and on conviction thereof, the offender shall be sentenced to pay a fine of not exceeding five hundred dollars for each
itv as



violation of


(Sec. 2 of


Act, approved, April 22, 1909.)


Act approved June

1907, providing in terms






including foreign trust companies, appears to be limited to companies selling securities in the state on the






be appointed trustee upon

giving security."

Schott's Estate, 11 Plia. 120, 21 L.

92, Strobel's Estate, 2

N. C. 409. 'The courts of Pennsylvania have no power, even with the consent of the cestui que trust and remainderman, to authorize a trustee to transfer the trust fund to
a banking institution in a foreign country to hold as







Estate, 11 Dist. 73, 26 Pa. C. C. 212.

appointed executor Pennsylvania, resident within the jurisdiction, and has given security within


who has been

under the

will of a citizen of

the jurisdiction for the performance of his duties as

executor, and taken the oath of office and assumed






not to be regarded as a

foreign executor."

McCahan v. Reeder, "A non-resident

10 Dist. 298, 25 Pa. C.




righl to letters of


incompetent to object to the granting of letters to another or to petition to have them revoked if granted." Fick's Appeal, 114 Pa. 29.

and he


Rhode Island
Section 23, Chapter 227 of the General Laws, 1909, contains the following provision:

"No corporation, either domestic or foreign, and partnership, or association, except banks, person, no or trust companies incorporated under banks, savings state, shall hereafter make use of any this of the laws where its business is transacted, havplace the sign, at or other word or words,^ indiname, any ing thereon office is the place or office of or place such that cating

bank, savings bank, or trust company. Nor shall any such corporation, person, association, or partnership make use of or circulate any written or printed or partly written and partly printed paper whatever, having thereon any name, or other word or words, indicating that such business is the business of a bank, savings bank, or trust company; nor shall any such corporation, person, association, or partnership receive deposits and transact business in the way or manner of a bank, savings bank, or trust company, or in such a way or manner as to lead the public to believe, or as, in the opinion of the bank commissioner, might lead the public to believe, that its business is that of a bank.

savings bank, or trust company." Under date of December 12. 1916, the Secretary oi State at Providence advises that in his opinion a foreign trust

an executor, adminguardian or conservator of an estate located in

company cannot

act as




South Carolina



was addressed

to the State

Bank Exam-

Pickens, asking the following- questions:
a foreign trust company act as trustee of property located in South Carolina? (2) If so, what prerequisites must it observe before taking title? (3) Are there any prerequisites for a foreign trust company entering upon the duties of an executor, administrator, guardian or conservator of an estate located in South Carolina? In reply the following was received from Thos. H.
( 1 )


Peeples, Attorney General, under date of Nov. 23, 1916:


"Your letter of the 19th inst. addressed to the Hon. M. Mauldin, State Bank Examiner, has been referred

for attention. "I beg to say in reply that foreign corporations desiring to do business in this state must comply with the provisions of our state statutes requiring them to pay license fees, file copies of their charters and by-laws in the office of the Secretary of State and appoint an agent and place within the state for service of process upon them. There are no special statutes relating to


foreign trust companies. "Such a company could not be appointed administrator or guardian by a court of this state inasmuch as administrators or guardians are officers of the court who must be subject to the orders of the court in this

and always on hand

tion 3591,

to answer its process. special statutory provision, contained in Sec-



Code of Laws of South Carolina,

1912, a non-resident may receive letters testamentary from the Probate Court of this state upon giving the bond required by that section."

South Dakota

The following opinion was rendered by

the Attor-








Mitchell, S.



Banking and Finance, under date of December 18, 1916: is my opinion that under the laws of

our state a foreign trust company cannot act as trustee of any property located in our state. do not think a foreign trust company "Second. administrator, guardian or conexecutor, can act as in South Dakota. located of estate an servator "The law of this state relating to trust companies, being Chapter 255 of the Session Laws <»f 1911, provides for the incorporation and qualification of com panics to act as trustees and as administrators and executors. This law d< >es not make any provision for foreign corporations to act in such capacity, and Section 3-1 oi the same provides, among- other things, that no corporation shall accept or execute any trust mentioned in that act, unless it shall have complied with the proviI

sions of the act. "It is, therefore, my opinion that a foreign trust company cannot exercise any of its corporal powers in the state of South Dakota, either by acting as trustee The only or by acting as executor or administrator. incorporate to is right such secure way that you can and comply with the provisions of Chapter 255 of the



of 1911 of the state of South Dakota."

According to Section 2546 of Shannon's Code. 1896, "each and every corporation created or organized under or by virtue of any government other than that of this state for any purposes whatever, desiring to own property or carry on business in this state of any kind
or character, shall of State a copy of
first file in

the office of the Secretary
20, 1016, the Superintend-



date of


ent of Banks, Nashville, advises that the Banking Laws of Tennessee, which that department administers, does




not deal with the qualification of a foreign trust com-

pany doing business

in that state.

Foreign corporations authorized to do business in the state are permitted to employ the word "trust" as part of their name, by using thereafter the words "without banking privileges."
(Sec. 191, Art. 557,



The general foreign corporation laws (Revised
Civil Statutes, 911, Articles

1314-1318) apply in terms

to all foreign corporations "desiring to transact busi-

ness in this state, or solicit business in this state, or
establish a general or special office in this state."

There are no statutory prerequisites

relating to the authority or admission of foreign trust

The general




(Compiled Laws, 1909, 351-352, as amended by Laws, 1915, Chap. 136) relate to all foreign corporations doing business in the state. No such corporation shall "take, acquire or hold title, possession or ownership of property, real, personal, or mixed, within this state,"
without compliance with the provisions of this law.

The Attorney
General, Brattleboro, advised under
date of Dec. 23, 1916, -that in his opinion a foreign trust

company may not act as a trustee of property located in Vermont or as an executor, administrator, guardian
or conservator of an estate located in Vermont, because

of the provisions of section 73 of Act No. 158 of the Acts of 1910. This section reads as follows:



company incorporated under the laws of

in the same manner and subject to the same control by the c<>urt having jurisdiction. 1911-2. as receiver. if they comply with the domestic trust company act } (Rem. as administrator with the will affixed.' or whose articles of incorporation empower it to do a trust business. under the same circumstances. nor to enter upon the duties of an execu- administrator. or conservator of an estate located in this state. p. Gen. Sec. Dec. as administrator of a person deceased." (From letter of 11. codicil or writing testamentary. Virginia "The eign trust statutes of this state do not authorize a for- company to act as trustee of property located in this state.). 3720 et seq. It will he noted that the statute docs not include acting as trustees under agreement. Code.1 I IREIGN REGULATIONS the state may be appointed and act as executor of a will. Attv. it shall file. Washington Foreign trust companies not doing banking may he admitted under Rem. impliedly excludes foreign trust comand panies. desires to engage in business of loaning money on mortgage security in foreign any corporation this state. trustee or guardian of a person subject to guardianship. assignee. and Bal. as a natural person legally qualified. Chairman 1916. contains the whose name word 'trust. mortgage other corporate trusts. Sec. 3346 et seq. and "In Bal.) of State Corporation Commission. in addition to its articles of ineor- . guardian. tor. case 346. Opinions. Code." would appear that the Attorney Gen is based upon the reasoning that the cypress authority in the cases mentioned to domestic this it From eral's "pinion trust companies.

Code.000. Laws of 1915) apply in terms to all foreign corporations holding property or doing business in the state. . states in section 6 thereof that "no company shall be entitled to any of the provisions of this act. Wisconsin "In reply to your communication of November 18th will state that a foreign trust company may it it act as trus- tee for property located in this state." which include usual trust company activities. The general foreign corporation laws (Code 1913. 3346." as amended and re-enacted by Chap. All such companies are subject to examination by the commissioner of banking. unless it has filed with the secretary of state a duly authenticated certificate showing its paidup and unimpaired capital to be at least $100. in trust for investment." Sec. Acts of 1903. "A foreign trust company cannot enter upon the duties of executor.556 TRUST COMPANY LAW poration or association. either. guardian. duly attested by its president and secretary. or conserv- ator of an estate located in Wisconsin. and Bal. a resolution of its governing board. 7.) West The "Title Virginia and Trust Company Law. but cannot fore- close on mortgage property unless complies with sec- tion 1770b of the Wisconsin Statutes. expressly stating that state of it will not receive deposits in the Washington or accept from citizens and residents of the state of Washington property and money or (Rem. and chapter 3. section 2929. "The prerequisites to be observed before taking title are found in section 1770b. administrator.

1916." (From .) Wyoming There act. 4252) applies in company. Nov. ." Statutes. pertaining to foreign trust general foreign corporation law (Com1910. - . is no specific provision in the trust company chapter 105.' LATIONS "In order to do a trust business in this state it is necessary for the company desiring to do such business to organize as a trust company under section 2014-1 li to section letter 2014-77q of the Wisconsin Statutes.v. sections 3973. incorporated incorporated terms to "every under the laws of any foreign state or kingdom. excepting insurance companies. or of any state or territory of the United States beyond the limits of this state. of Commissioner of Banking. Madison. companies. piled The Laws 1913.

622) Benvvell v. J. Trans. Baltimore Trust & G. White Title (154 U. 129) Bangor Electric Light & P. Wiedersheim (143 Fed. (244 111. 660) 167 52 Saginaw v. Co. (55 N. B. 673) Application of Cooper. Mayor. 584) -Baldy v. (166 U. 180) 130. & T. R. & T. State (92 Ala. Robinson (52 Fed. Am. Beal (85 Me. 173) 526 Alexander v. (53 N. (75 N. Independent Dist. Co. Supp. Dolley (219 U. L. 446) of Schuylkill Bank (1 Prs. Doyle (210 Fed. Williamson (17 W. 124) Althouse v. Beard v. Payne (86 Ky. v. 530) Bank Comm'rs v. Matter of (22 N. 354) 222 161 140. Y. (70 N. 526) Alpena Portland Cement Co. Guaranty Trust Co. Graecen (36 N. Matter of (45 N. Co. Misc. S. Co. v. 529) 220. (37 Fed. (122 N. v. 145. Y. J. Eq. Eq. L. 151 of Montreal of v. 520) Bank Comm'rs v. 260 446 Bank Bank Bank Bank of Commerce Kentucky v. 158) 197 251 179 135 33 461 . v. Co. Y. Co. H. 200) Bergdorf. 107) v.Table of Cases (References are to pages) Page A 132 Alabama & N. 242) Amiss v. 673) Bangor v. 73) Avery. 223 30 213 23 549 219 B Crandall (78 Mo. Va. Matter of (206 N. S. F. Eq. 375) Bean v. Co. 154 Alston v. O. 945) Am. 388) Baltimore v. S. (88 Fed. Cas. (105 Fed. Co. East & West. 584) 134 211 69 100 61 174 255 74. Security Trust Co. 309) Black v. (137 N.. Bahia Baker & S. S. Barber v. Y. Security Trust Co. 491) & G. H. Y. 121) Arfwedson's Estate (11 Dest. R. 67) Assarie State Bank v. Jankins & Reynolds Co. v. In re (32 Q. etc. Hunter (171 U. 359) & Trust Co. Y. West Jersey T.

v. Rohm 110 318) 100 C Caldwell ( v. Walker (3 La. 660) 101 98 Butterfield Byers v. H. 789) C. Y. 763) Cheney v. 235 86 103 v. 150) Brown. 673) Brier. etc. v. S. L12) (75 Board Security Bank Ins. Div. (55 111. 238) ( 95 Ins. Re 28 C. 411) Bothin Cal. 706) Carrington v. D. 397) v. v. Y.. 194 Branson.. Misc. Trust Co. Browning (3 N. App. 2 Ch. Ry. Cicero (63 Neb. C. 484) Carlisle v. McGuire (58 Ala. (8 Bowman Bracey v. (104 U. Page 160 61 Am.. Y. (91 X. App. Y. 072) 505 30 17. (89 L. Ann. Sharman (145 X. Norris (157 X.<i L60 -' Browning v. Comm.42. Kelly (190 Pa. Lord Cameron v. Co. Life Ins. Y. E. Div. Co.) 263) Central Nat. 248 App. Chapman. M. Whitcomb (74 N. Wyandotte Co. 455) S.TABLE OF CASES. (175 Pa. v. Broadway Realty Co. Minn. Turner (101 Md. Misc. 482) In Bradwell. & T. Ky. 719) I I 93 55 31 Buckley 1 92 Bushong Butler v. . of 111. 466) v. 226) Budge v. v. Lawyers' T. M. 54) Central Trust Co. 190. St. v. 482) Central Gold Min. 541) Cowing (112 N. & D. Y. 371) Brumridge v. 187) Brown v. Title & B. (67 X. 150) 217 1G1 Chambers v. 313) Carnegie Trust Co. v. v. Matter of (86 N. In Re (1896.O. v. Matter of (150 N. H.) 132 alUmlcr Camden Safe Deposit & Trust Co. 486) Union Trust Co. Hicks (65 W. 437) Carter v. (169 Fed. Sioux Falls Stock Yards Co. Hicks (141 N. (References are to pages) Board. S. (58 Kan. 5) Buckler. 76 15 117 Central Trust Co. Va. 236 239 H 161 175 235. 535) 203 160 . 489). (46 Md. Central Trust Co. 1) Brooks v. (92 Kan. I. Co. v. Y. St. Matter of (96 N. J. 777) Hearne iss S. Piatt (3 Daly (N. (U. Taylor (82 Mo. v. Eq. v. (149 Fed. and Credit Trust Co. v. Brumridge (27 Beav. (67 Minn. 487) ( 153 Cal. L74) Bobb Bobb v. 30) 234 68 81 Div. 456) . Wooton re Mon. 21) Cameron v. Co. R. Bank Central Trust Co. Kress (215 N. 718) L90 Bottom Clarke (7 Cusli. Ch. 137) v. Gummow ( . Branch (100 U. Y. Co. Y. & T. 67) 30 132 Darst (218 Fed.

Rep. 691) Coyle v. 31) Chilcott v. Ind. v. 497) Clay v. Law Co. 50) & Guaranty Co. Pa. (218 Pa. v. Chalmers Co. 306) 21 Condert v. (92 N. Co. Bashford (120 Wis. 466 Colquitt v. 222. S. v. Hart (23 Colo. 520) Clark v. (38 Tex. v. S. 249) Colvin v. Y.. Cobb v. Peterson (76 Neb. Matter of (198 N. 1). Campbell (23 Utah 5G9) Clarkson Home v. 69 Ill 100. Tallahassee Falls Mfg. 554) Colorado & Southern Ry. Beales (111 Va.. (108 Fed. 506). Ch. Pa. 160 Columbia Knickerbocker Trust Co. Appeal of (241 Pa. Div.. C. v. Commercial Tel. (200 Fed. 193) Colonial Trust Co. Rep. 240 19 Chicago. Super. Co. (175 U. 643) 180 135 211 61 Clay (60 Ky. St. v. Alba Dentist Co. 2G0) 20. 441) Craft v. 208) Continental Trust Co. v.. Y.. 281). 537) 203 1016) Co-operative v. 468 83 Cottam County Eastern Counties R.. (1 John & H. 111. Re 30 Clark. 491) Clawson v. & O. Wm. Y. 123 132 Allen (216 Fed. v. 561) Chicago Title & Trust Co. Y.. 243) of Mecklenburg v. Blair (214 N..560 TRUST COMPANY LAW. (207 Mass. Trust Bailey (129 Co. App. Co. Co. & W. v. Co. Territorial Bank & T. 600) Contracting 115 Compton Copelan Co. Connolly (17 Ir. St. 263) 211 Chin Clark. 489) 32 Chicago Title & Trust Co. Ch. Am. etc. 100 81 473 . Allis- Continental & & Commercial Trust Bldg. 192) Commonwealth v. S. 411) Continental Trust Co. 479) S. St. 129) Ithaca St. App. Co. B. Co. 548) Taylor (64 N. v. R. Union Surety & S. D. & Q. 40) In re (140 Cal. Co. 110 144 Civ. v. Co. Taunton Safe Deposit Co. 178) Connolly v. 501) v. 207 30 (195 Pa. 179) v. Sohn (82 E. (166 111. 47. Continental Trust Co. Co. R. Trust & Savings Fund Co. Co. Dist. 153) 480) City Safe D. C. (241 St. v. Hart (217 Pa. Y. (References are to pages) Page Chestnut St. v. 580) v. 228 32 Chicago Title & Trust Co. (13 Pa. (37 Pa. Ry. Simpson (72 Ga. (141 N. Supp. v. Holbrook (2 N. & Savings. U. Doyle (259 111. 694) 160 542 220 44. In re (3 Dowling & R. 28. R.. 223. Zinzer (264 111. Primrose (4 Del. Commonwealth Vrooman (164 Pa. 158. Mce Ho. v. Co. R. (200 U. (222 Fed. v. 432) 223 204 260 160 254 80 Commonwealth Commonwealth Commonwealth Commonwealth Ct.

Div. Jandon (15 Wallace 165) City Trust Co. Northern Trust Co. Y. 529) !:: Sim. P. 56 . Wearne (20 S. v. 46) re 241 106 CIS Oh. 822) rawford v. Turner Economy I Wesl Jersey Title & Guaranty 210 '•'•' | Elmer v. R. 181) Title Co. 138. 375 93 Dix Burford (19 Beav.) Duncan. Savings Bank (133 Cal. Morlor (78 X. 148) 243 30 44 81 DeHaven v. 109 (83 S. U. Pittsburgh Plate Glass Co. 247) 534) lt Trusl Co. Northwest Loan & Trusl i 514 I (81 Wash. In 209 514 L43 30" Duncan v. : Dunne v. 260) Dreifus v. & Loan As>'n v. 454) 227 167 Cuyler v.. v. 27) In v. Union Savings Bank & Trust Co. Guardian Trust Co. Memphis & L. 855) Crane v. 409) Dollar Savings Fund & Trust Co. Nashville Abstract Co. Cussen v. Monsam River Trusl Co (95 Atl. Harmon (62 Va. (176 U. Y. Boston Gaslight Co. 10 Howard's Prac. (103 Va. 69) Dow v.a. (20 Fed. Y. v. (2 Dennio Denton Drozin v. 701) Dayton v. (64 C. 320) Buriton (15 Bur. Co. V. Cal. (64 N. Dillaway Dillaye v. 330) Cross v. 584) C. (131 N. Hearn (26 X. (89 Tenn. 471 Comm. Ct. Gen. E. Y. 345) v. S. (174 Miss. 392) 44. State (13 Ga. Johnson (69 X. R. Vpp. Co. is:. 194) Davies. 72) Creditors' Claim & Adj. & J. 477) Elliott v. Dunham v. (259 111. Manhattan Co. (156 X. S. Title G. 37*) Craughwell v. L0) Empire City Bank. Wayne v. 331) Davis v. 211 109 Davidge v. 307) 152 Dominion Trust Co. 185 of).TABLE 01 ( < AS1 561 kci"( ren< es are i<> pages) '-'"' (rail v. L37. Pratt (223 Pa. 80) (51 . v. 431) Dickerman V. St. In re (68 Kan. Bank X. App. Y. Eq. Comm. Northern Trust Co. Hildner (90 Atl. R. 118) 144 188 93 (1 12 Tenn. 78) 30 D Dashiell Any. Co. Dunn v. (213 Pa. O'Reilly (11 U. 221) Dickel v. 419) Dean v. (115 N. So. C. J. App. S. (203 X. X T. Y. 498). > 404) J • » 1 51 E Bldg. C. Miller (7 End. Cutting v. 663) Denny v.119. J. (X. Cir. (Matter L84. Y. 182 112 . v. (5 Harr.

(137 N. F 160. Co. Fairchild v. (217 Fed. (References are to pages) Page 256 Empire State Surety Co. Div. Farmers' Loan & Trust Co. v. 901) 188 12 Equitable Trust Co. Hughes (11 Hun. v. Salsbury (130 Mass. McGuire (Ark. 412) Pick's Appeal (114 Pa. 1171) Fentress Co. 136 First National First National First National Guardian Trust Co. 169) 113 115 218 27 161 93 (Same case in 70 Fed. 123) Estate Solicitors' Loan & Trust Co. Railroad Co. 423) Farmers' Loan & Trust Co. 104) 227 Farmers'. Supr. Va. (51 & Barb.. R. . 412) Farmers' Loan & Trust Co. 244). 33) 217 472 Farmers' Loan & Trust Co. R. of 16 Kansas (21 Abb. Union Surety Co. (3 Pa. v. Smith (74 Conn. . 146) 535 Farmers' Loan Trust Co. W. 105) First Nat. N. Forty-second v. 989) First National v. J. 244) Ex parte Belchier (Amb. 593) Equitable Bldg. D. v. Co. etc. (173 111. 163 S. (102 S. L62 Hedges (14 Wash. 588) 110. (187 Mo. 227 Farmers' Loan & Trust Co. v. C. Ins. v. 231) Bank v. Ferris (67 N. 265) . Chicago. Co. 117) 179 Farmers' Loan & Trust Co. Y. Fidelity Trust Co. v. v. . El. M. 494) First National v. 218) Ex parte Calhoun (87 Ga. Northern Pac. Y. Co. Bd. v. 29) Fidelity Trust Co. Brown (211 U. 699) 58 218 165 106 44 .. v. Loan & Trust Co. 661) 100 Farmers' Loan & Trust Co. 546 Fifth Ave. (155 S.562 TRUST COMPANY LAW. S. Zent (39 Oh. 321) v. 119. v. 544) Erie School Dist. (68 Fed. App. . 439) 224. R. R. Graham (100 U. P. v. v. Ct. v. St. S. v. (32 W. Bank of Commerce & Trust Co. (190 Pa. Griffith (203 Pa. (27 Fed. v. Reed (116 Tenn. 27) 251 163 44. Meridian Waterworks Co. Washington-Oregon Corp. 292) 61 80 94 200 132 213 Ex parte Wall (107 U. L. v. (139 Fed. 1) Farmers' Loan & Trust Co. S. W. W.. Grcenwell (10 Beav. 579) 226 Farmers' Loan & Trust Co. C. Harmony Fed. Co. Bank Bank Bank Bank Bank Bunting (7 Id. 130) Farmers' Loan & Trust Co. (66 Fed. v. Co. Ins. Trust & S. etc. Garis et al. Co. & Loan Ass'n v. 549 ?? 100 288. St. Clark (65 N. 110) Fenwick v. & M. etc. Co. Carroll County (194 Fed. W. R. Union Trust Co. 359) Ex parte Taylor (66 So. R. v.. 129. Lake St. 495) Fidelity. 625) Fed. v. v. (93 Fed. 303) Fitchie v.



(References are to pages)
Florida Savings Hank


Rivers (36 Fla. 575)






• •





of Friar's

Point (80 Miss. 750)

Fosdick v. Schall (99 CJ. S. 235) Foster v. Mansfield (3 Met. (Mass) H2) Frenkcl v. 1 u'dson (82 Ala. 158) Frismuth v. Farmers' Loan & Trust Co. (95 Fed.








Holland (20 Nev. 101) Lovering Co. (48 S. \Y. Q53





Baldt (188 N. Y. 546) v. Commonwealth Trust Co. (19G X. Y. i:;n Geiger-Jones Co. v. Turner (230 Fed. 233) German Alliance Ins. Co. v. Lewis (233 U. S. 389 Germania S.V. &Trust Co. v. Driskill (23 Ky.L. Rep. 2050) Gernsheim v. Central Trust Co. (16 N. Y. Supp. 127) Geyser-Marion Gold Min. Co. v. Stark (106 Fed. 558) Gibson v. American Loan & Trust Co (58 Hun. 443) Glaser v. Priest (29 Mo. App. 1) Glyn v. Title G. & T. Co. (132 N. Y. App. Div. 859)

Gause Cause




132 27 53









Goff (54


Va. 304)

Gray v. Merriam (148 111. 179) Gregg v. Hudson (8 Phila. (Pa.) 91) Gregory v. Binghamton Trust Co. (154 N. Y. Supp. 370) Griffin v. Miss. Levee Commrs. (71 Miss. 767)

164 172 235

City Savings

Fund & Trust

Co. (46 Pa. Supr. Ct. 423)..


Simonetsch (21 N. D. 277) Guaranty Trust Co. v. Diltz (42 Tex. Civ. App. 26) Grocers' and Merchants' Bureau v. Gray (Kentucky) Gulick v. Bruere (42 N. J. Eq. 639)



v. v.




Freedman's Saving Haeg (53 Minn. 33)

Patterson (16 N. Y. Supp. 170) & Trust Co.


Tenn. Ch. 122).... 21S

Hale v. Adams (21 U. R. 400) Holland Trust Co. v. Sutherland (177 N.

Y. 327)


Geiger-Jones Co. (U.
v. v.


211 211

Halloway Halloway Hamilton


(60 L. T. R. 46)



Porter (46 End. 62) v. Newland (1 Nev. 40) v. Siegel-Cooper Co. (167 N. Y. 244) v. McRae (18 Ontario P. R. 185)




(References are to pages)


Hansen v. Am. Security & Trust Co. (159 N. Y. App. Div. 801).. 228 211 Hardage v. Stroop (58 Ark. 303) 30 Harris v. Chipman (9 Utah 101)
Harrison v. Union Trust Co. (144 N. Y. 326) Hatt v. Hagaman (12 Misc. 171) Hawley v. Lathene (75 N. C. 505) Healy v. Lassen County Supr. Ct. (127 Cal. 659) Henkel v. Carnegie Trust Co. (213 N. Y. 185) Hervey v. 111. Midland Ry. Co. (28 Fed. 169) Herzog v. Title Guarantee & Trust Co. (148 N. Y. App. Div. 234)


513 163



Hill v. Hill (79 N.


Eq. 521)


Hodges' Estate, In

re (66 Vt. 70)
El. Co. (170


U. S. (227 U. S. 308) Holland Trust Co. v. Thomson-Houston Hollister v. Stewart (111 N. Y. 644) Holmes v. Gilman (138 N. Y. 369) Holt Co. v. Cronin (79 Neb. 424)


N. Y. 68)




Hopkins Horbach

v. v.

Burr (24 Colo. 502) Tyrell (48 Neb. 514)


Horn v. Lockhart (17 Wall 570) Howerton v. Sexton (104 N. C. 75) Hoyt v. M. Lagan (87 la. 746) Hughes v. Thistlewood (40 Kan. 232)

30 178 178
109, 462



Guaranty Trust Co. (150 N. Y. Supp. 190) Insley (56 Kan. 213)


251 Independent Dist. v. King (80 la. 500) 60, 68 Indiana Trust Co. v. Griffith (176 Ind. 643) 462 Industrial & General Trust Ltd. v. Tod (180 N. Y. 215) 241 Innerarity v. Merhants' Nat. Bank (139 Mass. 332) International Trust Co. v. International Loan & Trust Co. (153 14 Mass. 271) 30 Ions v. Harbison (112 Cal. 260)

Jackson and Wood, In Re (1 Barn 269) Jackson v. Phillips (14 Allen 556) Jacobson v. Mass. (197 U. S. 11) Jacobus v. Jamestown Mantle Co. (211 N. Y. 154) : James, Matter of (144 N. Y. 6) Jenkins v. Xat. Village Bank (58 Me. 275)
Jenkins Jenkins
v. v. v.

86 19

505 166


Neff (163 N. Y. 320) Neff (186 U. S. 230) Johnson (88 Ky. 275)

47 23

(References are to pages)



Jones Jones Jones


Countess of Manchester





Habersham (107 U. Morgan (90 N. Y.


174) (209

470) Fed. 105)


Empire State Surety Co.


Smelting Co. (102 U.




Kansas City Gas Co. v. Kansas City (198 Fed. 500) Kasey v. Fidelity Trust Co. (131 Ky. 009) Kaulbach v. Knickerbocker Trust Co. (148 N. Y. App.

Div. 331)


Kavanaugh Kavanaugh Keuthan v.


Commonwealth Trust

Co. (04 N. Y. Misc. 303)...


Gould (147 N. Y. App. Div. 281) St. Louis Trust Co. (101 Mo. App. 1)


101 Kerrison v. Stewart (93 U. S. 155) 52 46, Killingsworth v. Portland Trust Co. (18 Ore. 351) 98 King v. Merchants' Exch. (E. 5 N. Y. 540) Knickerbocker Trust Co. v. Condon (147 N. Y. App. Div. 871).. 108 249 Koch v. Missouri-Lincoln Trust Co. (181 S. \V. 44) 211 Kreitz v. Behrensmeyer (149 111. 490)







Lafayette Trust Co.

Biggs (213 N. Y. 280) Lamar v. Micou (112 U. S. 452) L. & N. Ry. Co. v. Mottley (219 U. S. 407) Land Title & Trust Co. v. Asphalt Co. (127 Fed. 1) Land Title & Trust Co. v. Tatnall (132 Fed. 305)

69 19





(100 Pa. St. 538)


Leak's Heirs

Leak's Ex'r (25 Ky.


Rep. 1703)

90 30

Leatherwood v. Sullivan (81 Ala. 458) Le Baudy v. Carnegie Trust Co. (154 N. Y. Supp. 900) Lee v. Sankey (L. R. 15 Eq. 204) Lehigh Coal & Nav. Co. v. Field (8 Watts & S. 232) Leyton v. Sneyd (2 Moore C. P. 583) License Victuallers' Mut. Trading Ass'n (42 Ch. D. 1) Lincoln v. Morrison (64 Neb. 822) Line v. Lawder (122 Ind. 548)

S5 120 85


61 253

Thames Loan & Trust

Co. (88 Conn. 1S5)

Little v.

(151 Mass. 109)




(20 Mont. 91)

Lockwood v. Manhattan S. & W. Co. (28 N. Y. App. Div. 68).... 168 .505. 507, 155 Lockwood v. U. S. Steel Corporation (209 N. Y. 375) Long Island Loan & Trust Co, Matter of (92 X. V. Aim'. Div. L) 60, 07 501 Lowrie v. Bank (Taney's Cir. Ct., Dec. 310) 160 Lowry v. Polk Co. (51 Iowa 50)
. .


(References are to pages)






T. Ry. Co. (83 N. Y. 223)


Machinists' Natl.

Mackenzie v. Macy v. Mercantile Trust Co. (59 Atl. 586 Madison Trust Co. v. Carnegie Trust Co. (167 N. Y. App.

Field (126 Mass. 345) Taylor (6 L. C. J. 83)


Div. 4) 252






Maine Trust & Bkg. Co.

Savings Bank (170 U. S. 283) v. So. Loan & Trust Co. (92 Me. 444)..

Mallon, Matter of (43 N. Y. Misc. 569) Mandel v. Fidelity Trust Co. (107 S. W. 775) Manhattan Bank v. Walker (130 U. S. 267) Manigault v. Springs (199 U. S. 473)



Ehlen (19 Atl. 649) Martin v. Bankers' Trust Co. (156 Pac. 87) 220, Marquette v. Wilkinson (119 Mich. 419) Marx v. Parker (9 Wash. 473) Maryland Trust Co. v. Nat. Mechanics' Bank (102 Md. 608) Marymount v. Nev. State Banking Bd. (33 Nev. 333) Mason v. Whittehorne (2 Coldw. Tenn. 242) Mathewson v. Wakelee (83 Conn. 75) Mattison v. Mattison (53 Ore. 254) Mawhinney v. Converse (117 N. Y. App. Div. 255)


222, 226








(167 U. S. 310)


Mayer v. Brensinger (180 111. 110) Mayer v. Brensinger (180 111. 110) Mayor v. Tenth Nat. Bank (111 N. Y. Mays v. Shields (117 Ga. 814) McCahan v. Rieder (10 Dist. 1298)





McCarter v. Imperial Trustee Co. (72 N. J. L. McCarter v. McCarter (7 O. R. 243) McCauley v. Ridgewood Trust Co. (81 N. J. L. McClure v. Central Trust Co. (165 N. Y. 108)





McEachern v. Stewart (114 N. C. 370) McFadden v. Mays Landing, etc., R. R. (49 N. J. Eq. McGuier v. Chicago, B. & Q. R. Co. (131 Iowa 340)


19 61

Bailey (133


Dist. R. 551).'.

McKee v. Downing (224 Mo. 115) Mc Kinky L. L. & T. Co, In Re (1 Pa.
v. Placeville,

76 248 98

etc, R. Co. (66 Cal. 606)

Mechanics' Baiik v. New York & New Haven R. R. (13 N. Y. 599) 135 Meisel & Co. v. Nat. Jewelry Bd. of Trade (152 N. Y. Supp. 913) 208 12 Mercantile Bank v. New York (121 U. S. 138) 470 Mercantile Trust & Deposit Co. v. Pickerell (99 N. C. 139) 460 Mercantile Trust Co. v. Portland & O. R. (10 Fed. 604)

(References are to pages) v. Railroad (51 Fed 529) Nat. Bank v. Carhart (95 Ga. 394) Nat. Bank v. Guilmartin (88 Ga. 797)



Mercantile Merchants' Merchants* Merchants'

Trust Co.

241 Lovitt (114 Mo. 519) 132 Merrick v. Halsey & Co. (U. S.) 06 Merrill v. Farmers' Loan & Trust Co. (24 Hun. 297) Metropolitan Trust Co. v. R. R. Equipment Co. (108 Fed. 913)... 122 470 Miami Gas & Fuel Co. v. Mills (15G N. Y. App. Div. 542) 154 Miles v. Montreal Copper Co. (40 N. Y. Misc. 282)





404 Vivian (79 Fed. 848) 101 Railroad (3G Vt. 449) 81 Miners' & Merchants' Bank v. Snyder (100 Md. 57) 98 Minnesota v. Duluth, etc., R. Co. (97 Fed. 353) 54 23, 29, Minnesota Loan & Trust Co. v. Beebe (40 Minn. 7) Missouri l'ac. Ry. Co. v. Mercantile Trust Co. (70 X. Y. Misc. 10) 400 101 Montgomery County v. Cochran (121 Fed. 17)
v. v.

Moore v. Donahoo (217 Fed. 177) Moore v. Eure (101 N. C. 11) Morgan L. & T. Co. v. Texas, etc., Ry. (137 U. Morse v. Holland Trust Co. (184 111. 255)
Mosler Safe Co.

S. 172)


222, 223, 220, 227

Guardian Trust Co. (208 N. Y. 524)

Mount Vernon-Woodberry, etc., Co. v. Continental Trust (121 Md. 163) Murphree v. Hanson (72 So. 437) Murphy v. Wheatley (102 Md. 501) Muth v. St. Louis Trust Co. (88 App. 596) Myer v. Western Car Co. (102 U. S. 1)

55 81


Nashville R. R.

Minnesota Title Ins. & Trust Co. (159 Mass. 437) v. Orr (85 U. S. 471) Nat. Bank of Goldsboro v. Hill (226 Fed. 102) Nat. Safe Dep. Co. v. 111. (232 U. S. 58) Nat. Safe Dep. Co. v. Stead (250 111. 584)



173 172




Savings Bank v. Ward (100 U. S. 195) Aug. Lumber Co. v. Scranton Trust Co. (240 Loan & Trust Co. v. Nine (27 Neb. 507) England Water Co. v. Farmers' L. & T. Co.

Pa. St. 500) ...
(54 N. Y. App.


Div. 309)


Jersey Paper Board & Wall Paper Mfg. Co. Trust & Safe Deposit Co. (57 X. J. Eq. 603)


Newson (50 S. E. 597) New York & New Haven Railroad


Schuyler (34 X. V. 30) 135

New York
N. Y.

Life Ins.


Trust Co.

Mortgage Co.

(7 N. Y. 364) Secretary of State (150 Mich. L97)





(References are to pages)




Taunton Safe Deposit

Northern Pac. Ry.


Trust Co. (203 Mass. 551)... 81 163 (86 Minn. 188)


Old Colony Trust Co. v. Wichita (123 Fed. 762) Ouderkirk v. Central Nat. Bank (119 N. Y. 263) Overton Co. v. Copeland (96 Tenn. 296) Owsley v. Eads, Trustee (57 S. W. 225) Oxdey Stove Co. v. Butter County (121 Mo. 614)



Pacific Title


Trust Co.


Sargent (Ore. 144 Pac. 452)


Page County

Rose (130



Co. (211 Mass. 194) Guardian Trust Co. (144 N. Y. App. Div. 863) Penn. Co. for Ins. on Lives, etc., v. Bauerle (143 111. 459) Penn Steel Co. v. N. Y. City R. Co. (160 Fed. 222) People ex rel v. Faulkner (107 N. Y. 477) People ex rel v. Knickerbocker Trust Co. (77 N. Y. Supp. 1000) People ex rel v. Knickerbocker Trust Co. (38 N. Y. Misc. 446)...

Am. Trust




139 154


People ex

rel v. Reilly (38

Hun. 429)


People ex rel v. Richards (99 N. Y. 620) People v. Binghamton Trust Co. (139 N. Y. 185) People v. Calif. Safe Deposit & Trust Co. (22 Cal. App. 69) 232, People v. Knapp (206 N. Y. 373) People v. Purdy (162 N. Y. Supp. 56) People's Trust Co., In Re (155 N. Y. Supp. 639) People v. Woodbury Dermatological Inst. (192 N. Y. 454) Perpetual Executors,' etc., Ass'n v. Swan (1898) (A. C. 763) Tliila. Trust Safe Deposit & Ins. Co. v. Philad. Trust Co. (123
Fed. 534)
Phillips v.






484) Pierce v. Place v. St. Paul Title Ins. & Trust Co. (67 Mirm. 126) Piatt v. Union Pac. R. R. (99 U. S. 48) Mummer v. Coler (178 U. S. 115) Plympton v. Bigelow (93 N. Y. 660) Preston v. Prather (137 U. S. 604) Providence Life & Trust Co. v. Mercer Co. (170 U. S. 593)

Lawson (27 Ga. Emery (32 N. H.



101 194
98 31

180 103





R. Co. (4 Biss. 35)

Schoeneich (144 Mo. 149) G. Co. (94 Mo. App. 5) Purchase v. Atlantic Safe Deposit & Trust Co. (81 N. Purdy v. Lynch (145 N. Y. 462)



Land T.

Eq. 344) 251

(References are to pages)



Dominion Trust Co. (32 D. L. R. 63) Reagan v. Farmers' Loan & Trust Co. (154 U. Rehden v. Wesley (29 Beav. 213)




95 76



Coal Co. (231



64 Reid v. Reid (237 Pa. St. 176) 186 Renkert v. Title Guaranty Trust Co. (102 Mo. App. 267) 471 Reynolds v. Kroff (144 Mo. 433) Rhinelander v. Farmers' Loan & Trust Co. (172 N. Y. 519).. 103, 464 Richard, Hanlon M., Co. v. Mississippi Valley Trust Co. (251 Mo.





Orleans Debenture R. Co. (102 Fed. 780).... 251 76 Evansville Foundry Ass'n (104 Ind. 70)
68 23
158, 168


Roach, In Re (50 Or. 179) Roane Iron Co. v. Wis. Trust Co. (97 Wis. 273) Roberts v. Stuyvesant Safe Dep. Co. (123 N. Y. 57) Robinson v. Iron Ry. Co. (135 U. S. 522) Roby v. Smith (131 Ind. 342) Roby v. Title Guarantee & Trust Co. (inc. 111. 336) Rodard v. Cooke (36 L. T. N. S. 6504 Roseville Trust Co. v. Mott (96 Atl. 402) Royal Trust Co. v. Harding (78 N. Y. Misc. 309) Rumsey v. People's Ry. (154 Mo. 215)





Safe Deposit Co. v. Pollock (85 Pa. St. 391) St. Paul Trust Co. v. Strong (85 Minn. 1) Sargent v. Oregon S. & L. Co. (144 Pac. 455) Satterthwaite's Estate, In Re (60 N. J. Eq. 347)



248 225



Kan. 165)
(20 S. D. 389)



Schott's Estate (11 PI. 120) Scott v. Gouch (111 N. E. 273)

180 549
247 50
192 110


Equitable Trust Co. (94 U. S. 419) Seymour v. Tradesmen's T. & S. Fund Co. (203 Pa. 151) Shaw v. Little Rock & Fort Smith R. (100 U. S. 612)

Seldon v. Chappell (47 Hun. 59) Shirk v. LaFayette (52 Fed. 855) Sinking Fund Com'r v. Walker (6 How. (Miss.) 143) Slanning v. Style (3 P. Wms. 334) Smith v. Van Ostrand (64 N. Y. 278) South New Market M. Seminary v. Peaslec (15 N. H. :n:)
Spalding v. Speer v. Colbert (200 U. S. 130) Spencer v. Weber (26 N. Y. H. D. 285)



Roberts (149 Pac. 41)





(References are to pages)






App. Ga.


Standard Oil Co. Standard Oil Co.


(107 Ky. 600)


S. (221


S. 1)

v. v.

(43 N.

H. 465)

State Electro-Med. Inst.

State ex. rel
State ex rel

State (74 Neb. 40) Bankers' Trust Co. (157 Mo. App. 557)
(130 la. 69)

46 46

Higby Co.

State ex rel

Lincoln Trust Co. (144 Mo. 562)
E. 726)

46 132 251

State State State

Agey Bank

v. v. v.
v. v.

of Commerce (54 Neb. 725) Bruce (17 Ida. 1) Central Trust Co. (106 Md. 268)

State State
State State

Foster (5 Wyo. 199) Mass. Bonding & Ins. Co. (91 Kan. 74)

68 52






Michel (113 La. 4)

State State State State State State

Midland State Bank (52 Neb.


v. v. v. v.

Nichols (40 Wash. 437) Northwestern Trust Co. (72 Neb. 497)






State v.

Reid (125 Mo. 43) Thum (6 Idaho 323)



Twining (N.


L. 683)

Stensgaard v. St. Paul R. E. T. Ins. Co. (Minn. 429) Stephens v. Rinehart (72 Pa. St. 434) Stephens v. Stephens' Adm'r (89 Ky. 125) Steppacher v. McClure (75 Mo. App. 135) Stikeman, Matter of (48 N. Y. Misc. 156) Stone v. Duvall (77 111. 475) Stone v. Missouri (101 U. S. 814) Strobel's Estate (2 W. N. C. 419) Struthers Coal & Coke Co. v. Union Trust Co. (227 Pa.

192 178



St. 29)

Ill, 465

242 Sturdee v. Cuba Eastern R. Co. (196 Fed. 211) 107 Sturges v. Knapp (31 Vt. 52) Suarez v. El Banco Territorial Y Agricola (16 Porto Rico 599).. 246 38, 249 Sullivan v. Kuolt (156 Wis. 72)


Taylor v. Taylor v. Cate (29 Ore. 515) Third Nat. Bank v. Boyd (44 Md. 47) Thompson v. Whitaker Iron Co. (141 W. Va. 574) Thoraldsen v. Hatch (87 Minn. 168)

Commercial Bank & Trust Co. (69 So. 508) Bryn Mawr College (34 N. J. Eq. 101)







(References are to pages)

172 161

Green ( 130 N. Y. 29) Tillinghast v. Johnson (34 R. I.

L36) 135)

Title G.
Title G.



T. Co.

Merrill (151 v. Levitt




X. Y. App. Div. 485)





201 T. Co. v. Sage (146 X. Y. App. Div. 578) East Tennessee V. & G. Ry. Co. (67 Fed. 168).. . ...110, 40? v. Vandervcer Canarsie Improvement Synd. Mis \. Y.


Toronto Gen. Trust Co. v. C. B. & Q. (64 Hun. 1) Toronto Trust Co. v. C, B. & Q. R. R. Co. (32 Hun. 190) Trenton Potteries Co. v. Title G. & T. Co. (17G N. Y. 65) Trowbridge v. Spinning (23 Wash. 48)
Tschetinian Tschetinian

516 155


City Trust Co. (186 N. Y. 432) City Trust Co. (97 N. Y. App. Div. 380)


Hampshire Trust Co. (69 N. H. Turley, Margaret, Re (9 Mackey 315)


v. v.


Gilmore (N. J. Eq. 617) Corporation Trust Co. (104 N. Y. App. Div. 486)


Union Union Union Union

Bank & Trust Co.



(58 S.




50, 218, Savings & Trust Co. v. Krumm (88 Wash. 20) Trust Co., Matter of (86 N. Y. Misc. 292) Trust Co. v. Sickles (125 N. Y. App. Div. 105) United Service Co., Re (L. R. 6 Ch. 212) U. S. Title Guaranty Co. v. Brown (166 X. Y. App. Div. 688)....



122 160

U. S. v. N. O. R. Co. (12 Wall. 362) U. S. v. Thomas (15 Wall. 337) U. S. v. Prescott (3 How. 578) Unity Co. v. Equitable Trust Co. (204 Uvedale v. Ettrick (2 Ch. Cas. 130)




Van Sicklen v. Bartol (95 Fed. 793) Van Tuyl v. Scharmann (208 N. Y. 53) Veil v. Commonwealth Title Ins. & Trust Venner v. Farmers' Loan & Trust Co. (54



Co. (189 U.


133 >...


X. Y. App. Div. 271)..


Girard (43 U.



v. v.


Equitable Trust Co. (153 X. Y. App. Div. 737)..". 140
69 57

Catlett (83 Va. 200) Joslin (186 U. S. 142)



Benedict (46 N. Y. App. Div. 484)


(References are to pages)





T. Co.


Susquehanna Coal Co. (26 App. D.



Levy (41 La. Ann. 447) Weed v. Bergh (141 Wis. 569) Weichers v. Central Trust Co. (80 Hun. 576) Wells Fargo & Co., v. Northern Pacific Ry. Co. (23 Fed. 469) Western Loan & Savings Co. v. Silver Bow Abstract Co.

30 23
140, 143


Mont. 448) Wheeler v. Equitable Trust Co. (206 Pa. 428) Whitney v. First Nat. Bank (154 U. S. 664)




(3 Giff. 116)


Wilson Wilson Winter

v. v. v.

People (19 Colo. 199) Wichita County (67 Tex. 647)

160 134


G. L., Co. (89 Ala. 544)

Crandall (197 111. 104) Woodruff v. N. Y. S. E. & W. R. R. Co. (129 N. Y. 27) Woodruff v. Woodruff (44 N. J. Eq. 349) Wyckoff v. Epworth Hotel, etc., Co. (146 Mo. App. 554) Wyckoff, Matter of (67 N. Y. Misc. 1)


252 470


Yellowstone Co. v. First Trust & Savings Bank (46 Mont. 439).. 61 514 Yerkes v. Richards (32 Atl. 1089)

(References are to pages)






when when


as abstractor


liable to

employer and

to third persons

joint liability of


of court as protection to

mortgage trustee



AGENTS (See also Transfer Agents) trust companies, as agents, in general trust companies as agents for individual fiduciaries indemnity clauses in trust instruments with respect to agents. liability of trust company as agent for individual fiduciaries..


82 94

admission of foreign trust companies

copy of "trust company laws," where obtainable



New York



admission of foreign trust companies

copy of "trust


laws," where obtainable


admission of foreign trust companies copy of "trust company laws," where obtainable
528 263

under New York ASSIGNEES



companies as


of contents of safe deposit boxes