Case ID: misc2d_17/html/0203-01.html
Source: Caselaw Access Project
Author: {"author": "Maximilian Moss, S.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In the Matter of the Intermediate Accounting of City Bank Farmers Trust Company, as Trustee under the Will of Pierre LeBrun, Deceased.
    Surrogate’s Court, Kings County,
    March 11, 1959.
    
      Hale, Kay & Brennan for petitioner.
    
      Ma<v Hoffman, special guardian for infant contingent remaindermen.
   Maximilian Moss, S.

As an incident to trustee’s intermediate account of four trusts created under articles “ Seventh, ’ ’ “ Eighth ” and “ Ninth ” of the will, the court’s instruction is sought as to the investments authorized by article “ Fourteenth ’ ’ of the will and as to significance to be given to the term “ fiscal agent ” as used therein.

Testator died a resident of Kings County, on February 14, 1924, leaving a will dated May 11, 1920, which was admitted to probate on April 11, 1924. The petitioner’s predecessor, a trust company, was appointed executor and trustee thereunder.

The portion of the will to be construed expressly states that the authority to invest shall be limited by the following: “Nor shall it invest in any shares or securities of which it may be promoter or underwriter, or of any corporation for which it shall be the fiscal agent.”

At the time the will was executed, trust companies were permitted “ To purchase, invest in and sell stocks, bills of exchange, bonds * * * and other securities ”. (L. 1914, ch. 369, § 185, subd. 9.) Trust companies now are not empowered to act as a promoter or underwriter of stocks, although under section 100 of the Banking Law, a trust company may act as a fiscal agent.”

The difficulty arises out of the fact that a fiscal agent is generally considered one which acts as interest or dividend paying agent, sinking fund agent, escrow fund agent, transfer agent or registrar, and perhaps even as a depository. The court must determine therefore whether or not the trust company is prohibited from making investments in the stocks or bonds of any corporation for which the trust company acts as interest or dividend paying agent, sinking fund agent, transfer agent, registrar or depository.

Construing the four corners of the will, the above-mentioned prohibition concerned itself with the avoidance of self-dealing, the desire for independence of action untainted by conflicts of interest, and not the mere ministerial banking activities of a ‘ fiscal agent ’ ’. The trustee is therefore not prohibited from making permitted investments in stocks, bonds or securities of a corporation for which it performs the activities of a fiscal agent as defined herein, and the said article is so construed.

Settle decree on notice.