The Daily bulletin. [volume] (Honolulu [Hawaii]) 1882-1895, 1894-02-16
CONTINUED from LIST Pdge.)


bonds. referring again to II Amr. ~ Eng.
Encycl Law. p. Is: But railroad bonds
have been held not permissible. those
secured by mortgage ON the roadbcd,
franchise, etc. for the reason that the
trustee could not himself directly en-
force the collection of the bonds 10y fore
closure"
personal securities are not favored.
since they are not safe. Though good
business man sometimes risks his own
money in consideration of high interest
or large possible profits on inadequate
surety the trustee. acting ~ he does in a
tiduciary capacity. cannot imperil the
funds of the cestui que trust for such pur-
pose, nor excuse himself for loss on the
plea that he did ns discreet business
man might have done with his own
money."-11 Encyc. $50.
In kimball VS.. Redding. 81 n. H.. 3Gi,
the Supreme Court after abiding to the
English law upon the subject Of trust in
vestment says: "ln this country the same
rule has not been adopted in terms for
obvious reasons. But it IL believed a
similar one has been adopted so far as to
require trust securities reasonably prac-
ticable. such as real estate well establish
ed State stocks. United States Govern
ment stocks, or other modes of invest
ment alike tried and safe"
In King Va. Talbert ~ y. T.. ~. the
Court says: IF il be said. that men of
| the highest prudence do in fact. invest
their funds in such stocks becoming
Subscribers and contributors thereto. in
the very formation thereof, and before
the business il developed, and in the en-
ercise Of their Judgment. on the prob
ability Of its safety and productivcness.
the answer ia, 40 do Just such men. look
ing to the hope Of profitable returns, in.
vest money In trade and adventures 81
various kinds In their private affairs
they do. and they lawfully may. pu, their
principal funds at hazard; in the affairs
Of trust they may not. The very nature
OF their relation to II fOrbids L."
In 7Ith y. T.. $50. bombs had been
taken by the trustee in a certain com.
pany. which bonds were made for the
purpose Uf raising funds TO construct n
railroad through its coal fields and other
improvements. The Court said: Their
security was dependent upon the success
Of the enterprise. which was purely
speculative. They were not such &c.
curity NJ u prudent executor or trustee
would have voluntarily selected for the
investment Of trust funds. a. the rules 81
Courts Of equity would have sanctioned
at IL said that the money loaned wa,
intended to be expended in the improve,
mcnt Of the land 10y constructing rail
road, but that engagement Of the cOrpOr
atiOn was not real estate security. upon
which trustee would have the right &
rely. nor was there any certainty when con
structcd it would be of any value. II can
not he pretended that trustee would bt
Justified In investing trust funds ON tn,
security of nm unconstructcd railroad
II does not appear that the pro
perry was yielding any profits ar incom,
out of which the interest could he paid
Regarding the investment IL one volun
tnrily made by the executors. with In,
view merely IL placing the trust fund n
interest, u cannot be sustained withou
over,hrowing all the rules which hnv,
been established In regard Ia the sccuri
ties In which trustees may invest"
IF the accountant had taken the nd
vice Of counsel. which L. always proper
particularly in 80 large an estate ns this
lac would have been informed that 10y ~
application Ia the orphans court. h,
could. under their direction. have mad,
an investment IN the stocks or securitic
prescribed by the Acts 81 Assembly
which would have exempted him from nj
liability for los. Not having done this
and not having complied with the tx
press and positive iniunctions 81 III,
teStator. he must account for the princi
pal thus invested with interest, deduct
ing such payments ~ have been mule ~
account" lhms"n's Appeal, B Penn
~.
II Is said In Perry on Trusts, Sec. ~
1T " one 81 the most important q
the duties 81 trustees To invest tn
trust fund in such manner that
shall he safe, and yield reason
able rate 81 income TO the ccstui lIl
trust. II there are directions In the In
, strumrnt Of trust IN Ia the time. manne
and kind OF Investment, the trustee
must follow the direction and power II
given them II there ure n,
directions In the instrument nor rules u
Court, nor statutory provisions in rcln
ton To Investments they must be- govern
cd 10y sound discretion and good faith
/, There IL one rule that IL universally an
plicable Ia investments by trustees AM
that rule IL, that trustees cannot inyes
trust moneys with personal securities.
Lord Kenyon said. that no rul
was better established than that triistr
: could not lend on mere personal security
. and II ought to he rung in the ears Il
every one who acted IN the character Il
trustee"
The same authority in Sec. l5f ATTIC
referring to In" fact that the Englis
rule requiring Investments Of trust fund
in government securities, and by sta,ut
in Bank OF England or ireland or Eas
India stock prevails in New York an
Pennsylvania, and referring to tue MAJ
sachusetts rule that trustees may invcs
IN bank stocks aud in shares Of manu-
featuring and insurance companies, siiys
1T would seem 10 be- the wiser course /
Withdraw the funds settled for the SUI
port Of women children and other partie
who cannot exercise I'm active diScretiO
III the protection IT their interests n
much IN possible from the chances q
business. Ii would seem Ia be wiser IA
the Court to establish the first rule /
the absence of special direction and leav
it to the trustee il he prefers to try les
safe Investment"
!. Sec. i5S says: In all cases the trustc
ought to exercise high diligence in asce
tanning the valuation, situation. conditiO
and productiveneSs OF the real estate ,
other property upon which 1t Is propose
Ia make Il loan of the trust money. f.
he will be- liable for the loss il hr
! guilty OF any negligence IN this respect
Nor is it sound discretion for tru,
tees 10 subscribe trust funds to new cr
terpriscs, H. for the stock for new mani
facturing insurance or railroad corpora
tions, when the undertaking must, in til
!. nature Of things be experimental; and
will not excuse the trustee that he sui
scribes his own money to such ente
prises M it is permitted to him to spccr
late with his own money if he sees tit"
Ito. Sect. l51.
/ IF the directions in the will are r
general that they do not point to an
particular class or CLASSES Of Investment
the trustees must invest in those s"cur
ties that are sanctioned by the Court: I
IL the trust is to invest in good and sui
, cient securities, the Court will sunctiu
no security not allowed by its rules an