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

plHCp Ills own III neHSuTluR tut
duty of the trustee with the usual con-
duct of the man Of average prudence in
the care of his own estate. reference Is to
he had to the conduct of such a man in
making permanent investments of his
savings outside of ordinary business
risks, rather than to his conduct in TAX
ing business chances. There are often
occurring good business chances in
which man may invest some OF his
own money without danger Of being call
ed imprudent, whatever the result. But
it will he generally conceded that mere
business chance or prospect, however
promising, IL not proper place for trust
funds.
while. Of course, all Investments. how
ever carefully made. are more or less
liable to depreciate and become worth
less. experience has shown that certain
classes Of investment are peculiarly liable
to such depreciation and loss. These.
of course. would be avoided by every
prudent man who was investing his own
money with view to permanency and
security. rather than chance of profit. A
trustee should therefore avoid them even
though he sincerely believes a particular
| investment Of that class te be safe as well
as PROFITABLE. Shares in the stock Of new
mining companies are conspicuous exam
pies Of this class.
"In the light Of experience. various kind
Of investments have come to he regarded
by intelligent and prudent men az I'M
suitable for trust funds. The courts have
simply given expression to this general
sentiment. Second mortgages are con-
' sidered unsuitable, as they subject the
trust estate to the possible necessity Of
] rnts al f,,p la 20, th., Hrat
| gage Gilmore Va. futile, ~ n. J. Ea.
81. So are bonds and stocks Of new
corporations where the success of the
business has not become established.
Adair VI. Brimmer, "a n. Y. 81: Tucker
W.. State. - Ind. 242: kimball w. Red.
ing. 81 y. II. S52: Dickinsons Appeal, l52
Mass. Isl: Simmons w. Oliver. "a Wis.
633. So are loans upon personal credit
only. Clark vs.. Garfield. \ Allen ~;
Barney w. Saunders. 10 How. 5}s. The
result OF many decisions In summed up
Pom. Ep. Jun. S1O14 IA follows: 1T ID
the settled rule in equity. in the absence
of express directions in the instrument
creating rhe trust, or Of statutory per.
mission, that trustees or executors cannot
invest trust property upon any mere per.
soma security. nor upon any stocks
bonds or other securities Of private bust.
ness corporations. Per Curtain. in
Mattocks vs.. Moulton. ~ maine 551 553
"Retiection, study and inquiry would
nj once have convinced the appellant OF
the incxpediency and danger Of such an
investment. The investments in the notes
and stocks Of the Union Packing Com
pnny seem also TO he within those classe,
Of investments adjudgcd unsuitable fol
trust funds. The company was compare
lively new corporation. doing u some
what risky business solely upon credit
II had assumed obligations by leasing
two factories In addition to the one il
owned. The business. thus spread out
was sensitive to changes in the markets
the crops, the migrations of fish. tn,
weather. etc, which are always variabl,
and uncertain elements. II had accumu
lated no surplus. II had no workinl
capital. II WIS liable Ia be overwhelmed
at the first unfavorable turn in affairs
This condition Of things seems 10 hay,
been recognized by the investing public
for the stock Of the company hal no sell
ing value in the market
The business may have promised well
The chance Of making money and build
ing mp u business was probably excellent
The appellant, man of well know
energy and enterprise, after personal in
vcstigation. formed q favorable opinion
of the compnny's prospects. But, how
, I ever, favorable and glowing those pros
poets. We think that In the light Of tn,
decisions Of the courts. and IN the ligh
81 general experience, the appellan
could and should have seen that he In,
M authority to invest trust funds II
them.
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The securities objected to are these
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= iinhh rlhn'ation bonds, Si6!NNh
e oahn railway anu LAM 20 bonds
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s, 1a'''e '""'N "''o''s w. poh"'
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tIa,a;,o Observation-Disclosures, ,,io'S"s s
-; - i',' :.,NTD -, 'o,,'. h = =;
, uuleu y! S-n ~ n'or.snge, Oalu hui
way 20; noh ,l. ,sinse th'silenlihg pesat
r'P,"G ~ y iSt n,ortghge oohusl !,
r ,r I; W III na %' i. no.e, stcIreu U
! a on nv" ~; S..rh, Is'hee 'n,s nea'i ~
\ nsB"n, 'ao ~, h,'''i'"'S'''''r n"S r"'Sea u
= "T ~ y" n,,; ,hm. /, ,,.. A.. u ,,,
, Sl,pIMn wrrc raised tn nav fnr imnrnv,
m.nts that mo dividends have bcen mi,
, and thot SJo nm fnr nayment ~ matmr,.
honds was horrowei Tar The nmrnns,
That the plnntntion denended nm ra;
, for irritation, ond that the honds mr.
y secured by a trust deed which passe