The Hawaiian gazette., 1894-04-03

l. w EEkLY
discretion and intelligence in such
matters employ in their own like
affairs"
As to the class of securities that
have been held to be safe and proper
investments for moneys held in trust
The English decisions are almost a
unit in declaring that the public
funds and loans upon real estate sec
urity are the ouly ones that Will be
sanctioned. In the New York cases
above cited, although the Courts
have rather disclaimed the binding
force of the English common law in
that State yet they have almost
without exception adopted the Eng
lish rule; while the Massachusetts
Courts have taken decidedly broad
er view of the matter. The preced
ent established by the case of Har
ward College V. Amory, 8 Pick. 465,
is somewhat weakened by the ex
press provision in the will tina: the
executor might invest the funds in
safe and productive stocks, but this
rule is citid, approved and followed
in the case OF Lowell v. Minot, 20
Pick. 119. In that case college v
Amory) the Court approved of the
following investments:
rs shares in n. L. Bank
| Stock...... .-.....-. .-..-.S 5000 %
| 2i7 shares Fire and Marine
Insurance Company 16, 466 81
8 shares in Boston Manufac-
turing Company, and 9
shares i'll Merri mack Man
ufacturing Company; say
Is shares of $1,000 at 40
per cent. advance. ......-.... 25,2O0 90
Total ......... ...-..-SoO,O ,OoO w
In Lowell v. Minot, the guardian
made loan upon promissory note
secured by shares in manufactur-
ing corporation; the maker failed
and also the endorsers and the stock
became deprecated below the face
Of the note. Shaw, G. j. said referr-
ing to the College " Amory: "Tak
ing this to be the rule, the Court are
of opinion that the guardian act
ed in good faith and with sound
discretion in making the in
vestment which he did. He
took the note of person then
in good credit, with a pledge of
stock as collateral security at the
rate of about three quarters of its
par value and less than three quar-
ters of its market value
The subsequent tran saction in the
sale of these shares is open to the
same considerations. II vas conduc-
ted with good faith and sound dis
cretion. and though As events turned
out i'll consequence of the failure of
the purchaser and of his two endor
sers and of the debtor on the mort
gage given for collateral security.
1t would have been better and for
the interest of the ward if the shares
had not been sold yet this could not
be forseeD, aud is no proof of negli-
gence or want of sound discretion"
Both of the above cases are cited and
approved by the court in Brown V.
French, lbs Mass. Ais. In that case
bonds of a railroad company in
course of construction were held
under the circumstances to be pro.
per investment.
Has Mr.. Allen acted with sound
discretion in making the investments
complained of. In determining this
question adopt the rule as laid down
in the cases before cited, but decline
to be bound by the specific preferences
manifested in those decisions, except
so far as by parity of reasons and
conditions / find them useful as
guide. We are an isolated commu-
nifty; not only almost entirely depend
ent upon our internal resources, but
subject to outside influences, largely if
not quite beyond our control. A mans
actions are necessarily governed by
his opportunities, aud a criterion
that might be just in another country
might not be true standard to judge
by in this.
1t was urged as an indication of the
unsoundness of the securities that they
were unmarketable and that the per-
manency and eventual worth depend
ed upon the prosperity of the sugar
industry. These objections can be as
well made to every form of security i'll
this country, real estate and Govern
ment bonds included, for it is beyond
question that upon the prosperity or
failure of the sugar industry depends
the value of every kind of property
and the welfare of the large majority
of the inhabitants. Trustees cannot
be called upon to foretell the outcome
OF the future, nor be considered or
held to be guarantors for all time of
the investments which they May
make. What was the nature of the
security at the time it was taken; and
did Mr.. Allen act as prudent man in
doing as he did.
The first security objected to is the
investment in the o. r. & l.. Co.'s |
bonds. These bonds are secured by a
first mortgage upon the property and
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