trustee to bind the estate will not make him personally liable in cases of executory contract where the facts show that no such to the liability of trustees of charitable funds for torts of employees and agents, see infra, § 747, note. He may undoubtedly relieve himself from personal liability upon his contracts for the benefit of the trust by a special provision in the contract. Packard v. Kingman, 109 Mich. 497; Mitchell v. Whitlock, 121 N. C. 166; Kohen Iron Works v. Kinealy, 86 Mo. App. 199; Hussey v. Arnold, 185 Mass. 202. But description of himself as trustee is not sufficient. Taylor v. Davis, 110 U. S. 330, 335; Connally v. Lyons, 82 Tex. 664; McIntyre v. Williamson, 72 Vt. 183; McGovern v. Bennett, 146 Mich. 558; Tuttle v. First Nat. Bank, 187 Mass. 533. Thus it has been held that a trustee with authority to mortgage who describes himself in the mortgage note as trustee and puts the word "trustee" after his signature is nevertheless personally liable upon the note. Hall v. Jameson, 151 Cal. 606. But a description of himself in the contract as trustee is doubtless some evidence of an agreement with the other party that he shall not be personally liable. See Crate v. Luippold, 43 N. Y. S. 824, 13 App. Div. 617. Most courts do not recognize a liability of a trustee in his representative capacity. Johnson v. Leman, 131 Ill. 609; Shepard v. Creamer, 160 Mass. 496; Truesdale v. Philadelphia Trust Co., 63 Minn. 49; Hampton v. Foster, 127 Fed. 468. But see Yerkes v. Richards, 170 Pa. St. 346; Prinz v. Lucas, 210 Pa. St. 620; Scheibeler v. Albee, 99 N. Y. S. 706, 114 App. Div. 146; Ferrier v. Trépannier, 24 Can. Sup. 86. A trustee's liability as stockholder for calls, etc., is a personal one, but, in most States has been limited by statute to the trust property. See U. S. Rev. Stats., § 5152, as to national banks; Pauly v. State Loan & Trust Co., 165 U. S. 606; Hampton v. Foster, 127 Fed. 468; Fowler v. Gowing, 152 Fed. 801, holding that in New York an action against a trustee stockholder in an insolvent bank must be brought against him as trustee. As to the rights of creditors to resort to the trust property, see infra, § 815 b, and note. A substituted trustee is of course not personally liable for the torts of his predecessor or for the latter's contracts for the benefit of the trust estate unless he assumes them, and his acceptance of the trust is not in itself an assumption of the previous trustee's obligations. Foote v. Cotting, 195 Mass. 55; U. S. Trust Co. v. Stanton, 139 N. Y. 531. It has been held by a divided court that three cotrustees who continued the business of the testator under a firm name for the benefit of the trust estate were not copartners since they were not beneficially interested in the business, and that a retiring cotrustee had no duty of giving notice of his retirement to those having credit dealings with the business. Failing to give notice of his retirement he was nevertheless held not to be liable on contracts with a prior dealer who did not know liability was intended by either of the parties.1. A trustee with absolute control can give a license for his life to a railway company to use the land for a roadbed. A trustee cannot go beyond the purposes of the trust deed and bind the estate.3 § 437 b. Though "trustee" be added to the signature of a note or bond it may be mere descriptio persona, and the obligation individual. And, on the other hand, although the signature of a receipt be merely that of the trustee as an individual, the receipt may be really given as trustee and bind the cestuis.5 A note, though not signed as trustee, will, as between the cestui and the trustee, be the obligation of the former if the debt was properly incurred for its benefit." 1 Michael v. Jones, 84 Mo. 578. [Fehlinger v. Wood, 134 Pa. St. 517, 523.] 2 Tutt v. R. R. Co., 16 S. C. 365. 3 Pracht & Co. v. Lange, 81 Va. 711. Cruselle v. Chastain, 76 Ga. 840; Bowen v. Penny, id. 743. [ Hall v. Jameson, 151 Cal. 606.] Thomassen v. Van Wyngaarden, 65 Iowa, 689. he had retired. Noyes v. Turnbull, 54 Hun, 26, 130 N. Y. 639. See also Wells-Stone Co. v. Grover, 7 N. D. 460, 41 L. R. A. 252. CHAPTER XV. POSSESSION CUSTODY CONVERSION INVESTMENT OF TRUST PROPERTY, AND INTEREST THAT TRUSTEES MAY BE MADE TO PAY. § 438. Duty of trustee to reduce the trust property to possession. Time within which possession should be obtained. Diligence necessary in acquiring possession. § 439. § 440. § 441. The care necessary in the custody of trust property. § 442. § 443. §§ 444, 445. § 446. § 447. In what manner certain property should be kept. How money must be deposited in bank. Within what time trustee should wind up testator's establishment. Trustee must not mix trust property with his own. § 448. When a trustee is to convert trust property. § 449. § 450. § 451. General rule as to conversion. When a court presumes an intention that property is to be converted. When the court presumes that the property is to be enjoyed by cestui que trust in specie. § 452. Of investment. As to investment in personal securities. As to the employment of trust property in trade, business, or speculation. Rule as to investments in England. Rule in the United States. Of investments in the different States. Construction, where the instruments of trust direct how investments may be made. § 462. § 463. § 464. § 465. § 466. § 467. § 468. § 469. Within what time investments must be made. Trustees must not mingle their own money in investments. Original investments and investments left by the testator. Acquiescence of cestui que trust in improper investments. tion of duty. When he is directed to invest in a particular manner. § 470. § 471. § 472. When he improperly changes an investment. When compound interest will be imposed, and when other rules will be applied. Rule where an accumulation is directed. § 438. THE first duty of a trustee, after his appointment and qualification to act, is to secure the possession of the trust property and to protect it from loss and injury. Until possession is properly taken by the trustee the grantor is entitled to the profits of the estate. If the trust property is an equitable interest or estate, he must give notice to the holder of the legal title; and if he cannot have the legal title transferred to himself, he must take such steps that no incumbrances can be put upon it by the settlor or assignor. If the trust fund consists in part of notes, bonds, policies of insurance, and other similar choses in action, notice should be given to the promisors, obligors, or makers of the instruments. This is the general rule in England and in many of the United States.2 (a) In some 1 Frayser v. Rd. Co., 81 Va. 388. 2 Jacob v. Lucas, 1 Beav. 436; Wright v. Dorchester, 3 Russ. 49, n.; Timson v. Ramsbottom, 2 Keen, 35; Forster v. Blackstone, 1 Myl. & K. 297; Roofer v. Harrison, 2 K. & J. 86; Loveredge v. Cooper, 3 Russ. 30; Dearle v. Hall, id. 1; Meux v. Dell, 1 Hare, 73; Stocks v. Dobson, 4 De G., M. & G. 11; Voyle v. Hughes, 2 Sm. & Gif. 18; Ryall v. Rowles, 1 Ves. 348; 1 Atk. 165; Dow v. Dawson, 1 Ves. 331; 3 Lead. Cas. Eq. 612; Jones v. Gibbons, 9 Ves. 410; Thompson v. Spiers, 13 Sim. 469; Waldron v. Sloper, 1 Drew. 193; Ex parte Boulton, 1 De G. & J. 163; Pierce v. Brady, 23 Beav. 64; Martin v. Sedgwick, 9 Beav. 333; Evans v. Bicknell, 6 Ves. 174; Dunster v. Glengall, 3 Ir. Eq. 47; Forster v. Cockerell, 9 Bligh (N. s.), 332, 3 Cl. & Fin. 456; Feltham v. Clark, 1 De G. & Sm. 307; In re Atkinson, 2 De G., M. & G. 140; Mangles v. Dixon, 18 Eng. L. & Eq. 82; Brashear v. West, 7 Pet. 608; Stewart v. Kirkland, 19 Ala. 162; Cummings v. Fullam, 13 Vt. 134; Northampton Bank v. Balliet, 8 Watts & S. 311; Bean v. Simpson, 4 Shep. 49; Phillips v. Bank of Lewistown, 18 Penn. St. 394; Laughlin v. Fairbanks, 8 Mo. 367; Campbell v. Day, 16 Vt. 358; Barney v. Douglass, 19 Vt. 98; Ward v. Morrison, 25 Vt. 593; Loomis v. Loomis, 2 Vt. 201; Adams v. (a) In these jurisdictions an assignment of a cestui's interest in personalty or income takes effect as between assignees at the date of notice to the trustee. Lambert v. Morgan, 110 Md. 1; Low v. Bouverie, [1891] 3 Ch. 82; In re Wyatt, [1892] 1 Ch. 188; Stephens v. Green, [1895]2 Ch. 148. States, however, it is held that an assignment of a chose in action is complete in itself when the assignor and assignee have completed the transfer, and that notice to the debtor is not necessary in order to make the assignment valid as against third persons, or attaching creditors, or subsequent assignees without notice. But it seems to be agreed in all the cases, that, if the debtor without notice and in good faith pays the debt to the assignor, it will be a good payment, and discharge him from further liability;2 but if he should pay after notice he would still be Leavens, 20 Conn. 73; Van Buskirk v. Ins. Co., 14 Conn. 145; Foster v. Mix, 20 Conn. 395; Bishop v. Halcomb, 10 Conn. 444; Woodbridge v. Perkins, 3 Day, 364; Judah v. Judd, 5 Day, 534; Murdock v. Finney, 21 Mo. 138; Cladfield v. Cox, 1 Sneed, 330; Fisher v. Knox, 13 Penn. St. 622; Judson v. Corcoran, 17 How. 614. But see Beavan v. Oxford, 6 De G., M. & G. 507; Kekewich v. Manning, 1 De G., M. & G. 176; Clack v. Holland, 24 L. J. 19; Barr's Trusts, 4 K. & J. 219; Scott v. Hastings, id. 633; Bridge v. Beadon, L. R. 3 Eq. 664; In re Brown's Trusts, L. R. 5 Eq. 88; Lloyd v. Banks, L. R. 4 Eq. 222; 3 Ch. 488. [ Low v. Bouverie, [1891] 3 Ch. 82; In re Wyatt, [1892] 1 Ch. 188; Stephens v. Green, [1895] 2 Ch. 148; Re Patrick, 39 W. R. 113; Graham Paper Co. v. Pembroke, 124 Cal. 117; Lambert v. Morgan, 110 Md. 1; Houser v. Richardson, 90 Mo. App. 134; Jack v. National Bank, 17 Okla. 430; Phillips's Estate, 205 Pa. St. 525; Dillingham v. Traders' Ins. Co., 120 Tenn. 302. See also Goldthwaite v. Nat. Bank, 67 Ala. 549, 554; Tison v. People's Sav. & L. Ass'n, 57 Ala. 323, 331; Duke v. Clark, 58 Miss. 465, 474; Williams v. Donnelly, 54 Neb. 193; Starr v. Haskins, 26 N. J. Eq. 414; Tate v. Security Co., 63 N. J. Eq. 559, 561; Ga. Code (1895), § 3077; 1 Ames' Cases on Trusts (2d ed.), 326.] 1 Sharpless v. Welch, 4 Dall. 279; Bholen v. Cleveland, 1 Mason, 174; Dix v. Cobb, 4 Mass. 508; Wood v. Partridge, 11 Mass. 488; Warren v. Copelin, 4 Met. 594; Littlefield v. Smith, 17 Me. 327; Corser v. Craig, 1 Wash. C. C. 24; United States v. Vaughn, 3 Binn. 394; Muir v. Schenk, 3 Hill, 228; Talbot v. Cook, 7 Mon. 438; Maybin v. Kirby, 4 Rich. Eq. 105; Stevens v. Stevens, 1 Ashm. 590; Beckwith v. Union Bank, 5 Seld. 211; Conway v. Cutting, 50 N. H. 408; Garland v. Harrington, 51 N. H. 409. [Columbia Finance & Tr. Co. v. First Nat. Bank, 116 Ky. 364, 375; Putnam v. Story, 132 Mass. 205, 211; Whittredge v. Sweetzer, 189 Mass. 45; Thayer v. Daniels, 113 Mass. 129; Central Trust Co. v. West India Imp. Co., 169 N. Y. 314, 323; Fairbanks v. Sargent, 104 N. Y. 108, 116; Niles v. Mathusa, 162 N. Y. 546, 552; Downer v. So. Royalton Bank, 39 Vt. 25; Tingle v. Fisher, 20 W. Va. 497; Quigley v. Welter, 95 Minn. 383 (semble). See 1 Ames' Cases on Trusts (2d ed.), 326.] 2 Reed v. Marble, 10 Paige, 509; Mangles v. Dixon, 18 Eng. L. & Eq. 82; 1 Mac. & G. 446; 3 H. L. Cas. 739, and cases before cited; Stocks v. Debson, 4 De G., M. & G. 11. VOL. I. - 45 705 |