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body shall be elected or appointed at the same time and in the same manner, and shall serve for the same terms as members of such board of education or other body have been heretofore elected, selected, or appointed. We think the general purpose of this statute from which these citations have been made, was to create in every city the then existing board of education as a corporation with all the powers of the act of 1903. All boards of education of all cities of the state were brought under the act of 1903, and their proeeedings and powers were solely such as that act conferred, after the date of its approval. Sections 38 and 39 provided for a definite method of selection of board of education in cities adopting either of those sections, and if neither of said sections shall be adopted, then all cities are, as to the powers of boards of education, under a general statute which is uniform as to all.

It was suggested on the argument that if the school act of 1903 should be held to confer powers of condemnation upon all city boards, whether they were appointed under sections 38 or 39 of the act or not, that it was an unconstitutional statute, because special. We are unable to take this view. Neither section 38 nor 39 is operative in any city of this state, unless they shall be adopted by vote of the people after being submitted in accordance with the provisions of the act. These two sections are open to all cities, and any city may adopt either the one or the other of them, but no city is required to adopt either of them. This act merely takes the machinery existing in cities for the government of their educational system, and leaves such machinery as it is, but provides a uniform method for the management and control of all the cities of the state by the board or body as created or organized in such cities at the time of its approval.

We think the board of education of the city of Hoboken, as constituted at the time of the adoption of the act of 1903 and at the time of the making of the order brought up in this case, was a legal body, and that the act of 1903 gave it power of condemnation, and that the order of the justice of the Supreme Court appointing the commissioners should therefore be affirmed.

of the son, indorsed by C., were to be cancel. ed at his death, and the trustee should be credited with the sum expended in the payment of the same. 2. SAME.

Under this trust declaration and assignment, where a note was not made before the making of the declaration of trust, and was not a renewal of any note or potes existing at the time of the execution of the trust, the trustee was not warranted in paying it from the estate. 3. SAME-MANAGEMENT OF TRUST PROPERTY

SALE – EXPENDITURES-IN GENERAL-Com. MISSIONS.

Where real estate was transferred to a trustee to hold or convey the same thought best, items paid real estate agents and others as commissions on sales of real estate, which were shown to be reasonable commissions for the services rendered, were properly charged against the trust estate. 4. SAME-ATTORNEYS' FEES.

Where a party transferred all his property to a trustee, it was proper for the trustee to pay for the services of the lawyers engaged in making the transfers and the declaration of trust and in giving advice concerning the proper way to accomplish the object of the settlor.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 47, Trusts, $ 334.) * 5. SAME-RIGHT OF CESTUI QUE TRUST AS

AGAINST TRUSTEE PERSONAL LIABILITY OF TRUSTEE.

A settlor at the time of making a declaration of trust owned and transferred to a trustee shares of stock in an insurance company. The execution of a scheme whereby the trustee attempted to obtain a majority of the stock of the insurance company was prevented by the court, and the stock of the insurance company depreciated in value so that the stock of the trust estate sold after the defeat of the scheme brought much less than that sold before. Held, that it could not be said that the trustee should have known that the necessary result of the proposed scheme would be to de press the price of the stock of the insurance company; and he should not be surcharged with the difference between the selling price of the stock before the defeat of the scheme and the lower price at which it subsequently sold. 6. SAME.

Where a person transferred all his property to a trustee to hold as a trust fund, it was a general trust, and if the trustee held stock which came to him from the settlor, and which were not securities he was authorized by law to bold, he should be surcharged with the difference between the market value of the stock at the time he should have sold it, and the lower price at which it subsequently sold. 7. SAJE-INVESTMENTS-IN GENERAL.

Where a declaration of trust declared that the trustee hold the property transferred in trust for the following uses and purposes, “to hold or convey the same as in his judgment may be deemed advisable, and to collect the principal of securities and reinvest the same from time to time," the trustee was to exercise his discretion only in doing authorized things, and could not hold securities transferred to him which he was not by law authorized to hold. 8. SAME-COMPENSATION OF TRUSTEE-CoxMISSIONS.

Where a trustee's conduct was not willfully wrong, and he has not confused accounts, or unwarrantably used trust moneys, and has large resources, so that the making of unauthorized investments could not prejudice the interest of the cestui que trust, the fact that he was subject to surcharge in certain respects is insufficient to defeat his right to commissions.

[Ed. Note.-For cases in point, see Cent. Dig. vol. 47, Trusts, $ 460.)

(72 N. J. Eq. 745) BABBITT V. FIDELITY TRUST CO. et al. (Court of Chancery of New Jersey. May 17,

1907.) 1. TRUSTS CONSTRUCTION - PURPOSES OF TRUST.

A trust declaration and assignment, by which c. transferred all his property to a trustee, provided that the trustee should pay the interest on outstanding notes, bonds, mortgages, etc., given or indorsed by C., and from time to time reduce and cancel the same, and hold and retain without action, and without collecting interest thereon, all notes and securities given by C., or by his son, daughter, and son-in-law, until the death of C., and then to cancel them. Held, that a mortgage by the Bon-in-law, a bond of the daughter, and notes

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9. SADIE COMPENSATION OF TRUSTEE Edward B. Denny. The bill in this case is AMOUNT.

filed by Anna D. Babbitt. She obtained Where a trustee was held to a strict accountability, had charge of a large estate of a

loans from certain nonresidents, and made most varied character, was required to exercise certain assignments of her interest in the due diligence in the calling in of all unauthoriz estate of her father to secure the same. The ed investments, and had duties and responsibili

bill in this case was framed not only to seties not incident to the care of an ordinary trust estate, 4 per cent. upon the principal

cure an accounting from the Fidelity Trust was a proper allowance for his compensation. Company, the trustee, but also sought to lit

[Ed. Note.-For cases in point, see Cent. Dig. igate certain questions between the complainvol. 47, Trusts, $8 455–459.)

ant and those to whom she had executed the 10. SAME - OBJECTIONS TO ACCOUNT - COSTS assignments. These latter, being then repreAND EXPENSES.

sented by nonresident executors, filed a plea Where a suit is instituted and prosecuted in good faith to secure a construction of a

to the bill, and the issue raised was disposed declaration and assignment of trust, allowance

of by this court adversely to the complainmay be made, including costs and counsel fees, ant. The report will be found in 63 Atl. 18 to be paid out of the estate,

(Garrison, V. C., 1906). The suit thereupon (Ed. Note.-For cases in point, see Cent. Dig. proceeded as one of accounting between trusvo). 47, Trusts, $ 324.]

tee and cestui que trust. All of the other Suit by Anna D. Babbitt against the Fidel

beneficiaries under the declaration of trust, ity Trust Company and others. Conclusions or their assignees, are parties to this suit. by court.

The trustee, in addition to filing an answer See 63 Atl. 18.

and account, also filed a cross-bill, praying,

among other things, for a construction of cer. On the 19th day of July, 1898, Charles G.

tain portions of the declaration of trust, and Campbell, by appropriate instruments, transferred all of his property of every descrip

for directions concerning its duty under certion to the Fidelity Trust Company of New

tain provisions thereof. The complainant fil

ed exceptions to numerous items of the trusark, as trustee. The latter, on that date, executed a declaration of trust with respect to

tee's account. Issues were properly joined the said property. In said instrument it "de.

and are to be herein disposed of. clares that it holds the property, real and Henry H. Fryling and Chandler Riker, personal, this day conveyed to it by Charles for complainant. S. W. Beldon, for defend. G. Campbell in trust for the following uses ant Fidelity Trust Company. Edw. D. Dufand purposes: (1) To hold and possess or

field and J. J. Burke, for defendant Chas. B. dispose of and convey the same by proper in. Campbell. G. R. Dutton, for defendant Florstruments of conveyance, as in its judgment ence Joel. may be deemed advisable, and to collect the principal of securities and reinvest the same GARRISON, V.C. (after stating the facts). from time to time. (2) To collect the income The property which Charles G. Campbell from the personal property, and the rents, had, and which on the 19th day of July, issues and profits from the real property." | 1898, he turned over to the Fidelity Trust By other provisions it undertakes to attend Company as trustee, was of varied character to the taxes and repairs upon the real estate, and of large value. It consisted of real es. to the payment of interest on outstanding tate, mortgages, bonds, stocks of companies, notes and other obligations, and to their re furniture, pictures, bric-a-brac, money in duction and cancellation, and to pay the bank, and other characters of personal propproper expenses arising in the execution of erty such as an active business man of large the trust. The net income is to be paid means would possess. The face value exmonthly, in certain stated amounts, to the ceeded the actual value by many thousands settlor, his sisters, his son, Charles B. Camp of dollars, because among the property turnbell, his daughter, Anna D. Graham (since ed over were interests in real estate which intermarried with Babbitt), and the father could not be realized upon, and in some inof a deceased daughter's children. Upon the stances the real estate could not be located; death of Charles G. Campbell, certain sums and, also, among the property, were bonds are to be paid to his sisters, and the balance and stocks of various companies, which latis to be divided among his heirs at law ac ter were defunct, or, if in existence, the cording to the intestate laws of this state; stock of which had no value. The realized the personal property according to the stat. value exceeded $400,000, with some items ute of distributions, and the real property still undisposed of in the trustee's hands. according to the statute of descent. There The account of the trustee is a very long one, are other provisions which will be stated as and shows total receipts, principal and inoccasion requires it.

terest, of over $700,000; among the numerCharles G. Campbell died on the 29th day ous items of disbursement being advanceof May, 1905, and left, him surviving, bis ments made to the various parties to this daughter, the complainant; Charles B: Camp suit on account of their distributive shares. bell, a son; and Robert C. Denny, Walter A number of the questions raised under the B. Denny, and Julia Denny, children of Jen exceptions were disposed of at the hearing nie B. Denny, deceased, who was the daugh- by consents or arrangements between the ter of Charles G. Campbell and the wife of parties, and only need to be stated without

discussion. Others of the exceptions may be tlor and transferred to the trustee; but there grouped, and so much of the trust deed as re were between $16,000 and $17,000 worth of quires construction for the purpose of deter notes of Charles B. Campbell, indorsed by mining the rights of the parties need not be Charles G. Campbell, outstanding in the discussed separately, but will be dealt with hands of those who had discounted them. in connection with the subject-matter which It is evident that it was with these notes it concerns.

in mind that the fourth clause was inserted. 1. The first exception concerns a series of The exceptant contends that the proper promissory notes, all excepting two of which meaning to be ascribed to this fourth clause were made by Charles B. Campbell, the son is that the trustee is to reduce the notes, if it of Charles G. Campbell (or by firms of which deems advisable, and if, by reduction, they Charles B. Campbell was a member) and in are finally paid off, the trustee is to hold dorsed by Charles G. Campbell; the money the paid-off note, and charge it, after the going to Charles B. Campbell. After the death of Charles G. Campbell, against the making of the deed of trust, these notes distributive share of the maker of the note. were renewed, and such renewed potes were I do not think that this is the correct conpaid by the trustee. The two notes not com struction of this clause, or that it was the ing within the above statement are one made meaning of the settlor. I think it clear that by Denny Bros. and indorsed by Charles G. this settlor, who was disposing of all of his Campbell, and one made by Campbell & Os property, and had clearly in mind that which borne and indorsed by Charles G. Campbell, he wished to do with it, desired to treat his and paid to the Merchants' National Bank. son Charles, his daughter Anna, and his deThe point of the exception is that, under the ceased daughter's husband and her children declaration of trust, the trustee, if it paid with similar bounty. At the time of the such notes, must hold them and charge the making of the instrument he had advanced amount thereof against the distributive share money to his son-in-law, and to his daughter, of the maker of the note. This, of course, and had obligated himself upon the notes of depends upon the proper construction of the

his son. I think it entirely clear that by declaration of trust. This instrument has these two clauses he intended that, where he two claims which concern this matter of had actually made advances and held an obligations of Charles G. Campbell existing obligation therefor, such obligation was to at its date, the fourth and the tenth clauses. be retained by the trustee without action, The fourth clause is as follows: "(4) To pay and was, at the distribution of the estate, the interest on outstanding notes, bonds, to be canceled and delivered to the obligor; mortgages, etc., given or indorsed by the said and, similarly, he intended that the obligaCharles G. Campbell, and to provide from tion which he had undertaken for his son by time to time for the reduction and cancella indorsing his notes should be met by the tion of the same, as may be deemed ad trustee from time to time, and, when met, visable, provided it be done, so far as pos the note should be canceled. I cannot consible, without interfering with the execution ceive of any meaning to be given to the and performance of the trusts hereinafter set word "canceled,” in the fourth clause, exforth.” The tenth clause is as follows: "(10) | cepting the well-known one "to render null To hold and retain, without action and with and void.” This works out the scheme of out collecting interest thereon, all notes and equity which I think was in the mind of the securities given to Charles G. Campbell by settlor. I hold, therefore, that, when this Charles B. Campbell, Anna D. Graham and estate is to be distributed, the trustee is to Edward B. Denny, and now held by assign be credited with the payments of the notes ment by Fidelity Trust Company until the of Charles B. Campbell, indorsed by Charles death of the said Charles G. Campbell, and G. Campbell. This holding also applies to then to cancel and deliver them without the notes of Mrs. Babbitt, the complainant, charge to the said Charles B. Campbell, Anna which were indorsed by her father and paid D. Graham and Edward B. Denny, their re by the trustee; and also to the note of Denny spective heirs, executors and administrators." Bros., which was the title under which Ed.

At the time of the making of the declara ward B. Denny traded. These notes were in tion of trust, there was held by the settlor existence at the time of the making of the and delivered to the trustee a mortgage of declaration of trust, and were renewed and E. B. Denny, the settlor's son-in-law, for subsequently paid by the trustee, and there $2,100, and notes of his for $8,710. At the fore come within the language of the fourth same time there was held by the settlor and clause. The only remaining note to be dealt delivered to the trustee company a bond of with is that which was in the Merchants Anna D. Graham, the complainant, for $20, National Bank. This note was made by 976.51. Under the provision of the tenth Campbell & Osborne and indorsed by Charles clause, these two obligations were canceled | G. Campbell. There is no evidence that this at the time of the death of Charles G. Camp note was a renewal of any note or notes exbell, and the amounts thereof thus became isting at the time of the making of the gifts by the settlor to each of the persons declaration of trust. I cannot find any war. named. There were no notes or other securi rant or authority for the trustee paying this ties of Charles B. Campbell held by the set note out of the estate. If it has paid the

same, it must either be surcharged with it, or must, as between the parties hereto, charge the same against the distributive share of Charles B. Campbell.

2. The next exception relates to items in the account of commissions on principal retained by the trustee. Undoubtedly the trustee can only retain such commissions on principal as are fixed by this court, and the matter of this exception will be dealt with in adjusting the matter of commissions.

3. The next exception relates to the invest. ment in the gold notes of the Public Service Corporation. The amount involved is $99,750, and the point of the exceptant was that the investment was not one authorized by law. By consents made at the time of the final hearing this matter was satisfactorily adjusted; the trustee agreeing to charge itself with whatever the proper sum was in respect to this item.

4. The next exception relates to the payment on account of the distributive share of Charles B. Campbell in advance of payments of any of the other distributees, and merely requires adjustment of interest items.

5. The next exception relates mainly to items paid to real estate agents and others as commissions on the sales of real estate. These were shown to be proper commissions for the services rendered, and I think it entirely proper to charge them as the trustee has. Any effect which the rendering of these services by others should have upon the amount to be allowed to the trustee will be taken into account in fixing its compensation. The items in this exception which are not covered by the above statements are for lawyers' services, and only one item is ques; being conceded to be

item has to do with services at the time of the making of the declaration of trust. I think it clear, since Charles G. Campbell was transferring everything he owned to the trustee, that it is a proper item for the trustee to pay for the services of the lawyers engaged in making the transfers and the declaration of trust, and in giving advice concerning the proper way to accomplish the object of the settlor. I therefore allow this item.

6. The matter of interest on net bank bal. ances was adjusted at the trial, and was set off against the right of the trustee to charge interest on advances to the distributees.

7. The only remaining question under the exceptions relates to the conduct of the trustee concerning shares of stock of the Prudential Insurance Company.

The par value of this stock is $50, and much confusion resulted at the trial because the custom is to sell two shares at one time and call the same "a full share"; that is, the custom is to deal with this stock as if the par were 100, and deliver two shares to make what is termed "one full share.” To avoid confusion I have dealt with the stock as it actually was, namely, each share at a par of 50. At

the time of the making of the declaration of trust, the settlor owned and transferred to the trustee 167.27 shares of such stock. This was disposed of by the trustee at the following rate per share of $50 each: February 23, 1899, 60 shares at $360; February 6, 1900, 13 shares at $350; August 20, 1901, 20 shares at $375; December 7, 1903, 30 shares at $200; December 23, 1903, 25 shares at $195; January 25, 1904, 19.27 shares at $200. It will be observed that the first three sales averaged about $360 a share, and that these took place prior to the year 1903. The sales made after that date do not average quite $200 per share. The proofs show that down to about November, 1902, the stock of the Prudential Insurance Company was readily salable at about the average figure shown above, namely, $360 per share, and that since that date the latter average has been about the obtained price, namely, $200 per share. At about the date in 1902 just mentioned, the Fidelity Trust Company and the Prudential Insurance Company endeavored to carry out a scheme by which each should own a majority of the stock of the other, and by this means the existing management in each company could perpetuate its control. In execution of this scheme, the Fidelity Company offered the stockholders of the Prudential Insurance Company $300 per share for onehalf of their holdings. It succeeded in purchasing two shares over one-half of the capital stock of the Prudential Insurance Company. This court (Robotham v. Prudential Insurance Company (Stevenson, V. C., 1903] 64 N. J. Eq. 673, 53 Atl. 842) prevented the execution of this scheme, and the Fidelity Trust Company parted with sufficient of the stock to reduce its holdings below a majority.

correct at the hearing bene questioned titelne Storhetexceptant charges that the trustee,

Fidelity Trust Company, should have known that the scheme it embarked in with respect to the Prudential stock would depress the price or value of that stock, and therefore it should be surcharged, on the stock held in this trust, with the difference between the selling price of the stock before it entered upon the execution of the scheme and the lower price at which the stock subsequently sold. Applying to the trustee the rule of care to which it was subject, I cannot say that I find that it should have known that the necessary result of the proposed scheme would be to depress the price of the stock of the Prudential Insurance Company. The scheme was undoubtedly conceived with the purpose of perpetuating the management of those then in the control of each of these companies: but, as appears by the facts stated in the cited case, each was solvent and possessed of large assets and of a great and valuable business, and the business of each was growing and not diminishing, and I do not think it fair to infer that a reasonable man should have believed that perpetuating the then management would lessen the value of the stock of either of the companies. Whatever

the result may have shown the fact to be, I reasonable discretion; second, that by the do not believe that at the time the scheme declaration of trust it was given discretion was proposed and was attempted to be car with respect to investments, and therefore ried out there was any thought in the minds is not chargeable for anything excepting neg. of the parties that it would decrease the val ligence. As I have before said, I do not ue, in the market, of the stock of the com concur at all in the view that this is a trust panies concerned. The very fact that the of a specific thing, or that this is a case to parties engaged wished to retain control and which the authorities relating to duties of invested large sums of money for that pur trustees under trusts of specific things can be pose shows that they thought that each in applied. It is true, of course, that a specific stitution was a valuable one and would so thing, or rather a great number of specific continue. I do not, therefore, concur in the things, were by this settlor turned over to point made by the exceptant that, under the this trustee; but the real transaction was a rule concerning the care with which a trus turning over by the settlor of everything that tee is chargeable under such circumstances, he possessed to the trustee for it to handle this trustee is to be surcharged in this re and manage under its obligation as trustee, spect.

subject to the responsibilities thereof. I I do find, however, that the trustee is to shall not stop to cite or analyze the various be surcharged with the difference between cases in which the subject-matter of the the fair ‘market value of this stock down to trust was held to be specific, but will cor1903, and the price at which it was sold in tent myself with saying that in each case, as 1903 and 1904, for the reason about to be I have read them, it was clear that the setgiven. The trust in this case was of a tlor intended that the identical thing transunique character, It was a transfer by a ferred should be held by the trustee. There living person of all of his property of every is not the slightest evidence in this case of kind and description, including even his the settlor's intention that this trustee should household goods and his money in bank. It hold any specific thing, and it is quite clear, was, in the broadest sense of the word, a gen I think, from the circumstances, that there eral trust. Under such circumstances, I could have been no such intention. Among think it the duty of the trustee, so soon as other property transferred to the trustee it could do so in the exercise of reasonable were household furniture, pictures, bric-adiligence and good judgment, to convert the brac, and money in banks. Certainly it securities which came to it from the settlor was not intended that these several species into cash and invest the same in securities of property were to be held in specie by the authorized by law. It is admitted by all of trustee. Similarly, there is notbing to show the counsel in the case that there is no stat that any of the transferred property was ute law involved, excepting to the extent to be so held. The intention clearly sbown that the statute points out the investments in was to hand over all of the property owned which trustees are authorized to place trust by the settlor to the trustee for the latter to moneys; and it is conceded that the stock of deal with as trustee, and under such circumthe Prudential Insurance Company is not stances the law is clear that the trustee can one of those so authorized. The general only escape responsibility by converting the principle deducible from the cases and text unauthorized securities thus transferred to books is well stated in the seventeenth vol it into authorized securities so soon as it conume of American & English Encyclopedia of veniently and reasonably may do so. Law, p. 454, as follows: "While a fiduciary In the case in hand, it is clearly sbowo may, as a rule, in the exercise of his discre that it could have sold the Prudential stock tion, retain such investments as are proper during the years 1898, 1899, 1900, 1901, and for the fiduciaries to hold, all others he must 1902 at at least $360 per share. The income call in, and invest the proceeds in an author. from this stock was very small, being 10 ized manner.” Perry on Trusts, $$ 460, 461, per cent. upon $50 par, and therefore about 465; Ashhurst v. Potter (Ct. of Errors, 1878) | 142 per cent on the market value of the 29 N. J. Eq. 625.

stock. There was therefore no reason, proper. The trustee in the case at bar seeks to es ly viewed by the trustee, to induce it to hold cape the responsibility involved in the appli an unauthorized security, paying so little, at cation of this principle. In the brief of coun a time when the market for its sale was sel for the trustee, its position is thus stated: open, and a large price could have been ob. "The rule contended for has undoubted ex tained for it, and that price could have been istence, but is not of universal application. invested in authorized securities to yield & It is applicable to trusteeships where the rate of interest at least three times greater subject of the trust has come to the trustee than that received from the then investment. as a general estate, or an aliquot portion of With respect to the argument that by the an estate, but is not applicable where it comes terms of the declaration of trust the trustee as certain and specific property, unless there was so vested with discretion that it is not be a direction to convert." It therefore in chargeable for maintaining unauthorized insists: First, that this was a trust of a specific vestments, it is necessary, to refer to the thing, and that it was entitled to hold that language of the instrument. The material thing, chargeable only with the exercise of part thereof is that in which the trustee d

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