New-York tribune., 1900-04-29
CAN'T INVEST IN TRUSTS.
APPELLATE DIVISION DECIDES PLACING
FUNDS BY TRUSTEES IN INDUSTRIAL
COMBINATIONS FORMED TO CON
troll PRICES Is ILLEGAL.

decision recently handed down by the Appellate
Division of the Supreme Court. in the Second De-
partment. and Just reported. presents new phase
the trust question. and will give an uncorn-
Portable feeling to executors, administrators.
guardians and others who have the control OF
trust funds for investment The Court, In effect.
decides that the investment by a trustee or the
funds possession in the stock OF an indusrlal
combination formed for the purpose OF controiine
prices is illegal and unauthorized The Judgment
also DEGREES that the trustees In the case In Whch
the adjudication was made shall pay over to the
estate the sum thus invested the same as II 10
such investment had been made
The controversy arose over the estate OF Avian
Hall and the money was invested in the corpora
ton known the Umbrella Company, ana some
times called the Umbrella Trust, which collapsed
after an existence of about two years Thomas u
Ritch and Albert C. Hall were appointed trustees
under the will of Alvah Hall, who before ms
death carried on the umbrella business under the
name of AIvah Hall & Co, and who left consider-
able of a fortune
When the Umbrella Company was tormeu tue
trustees Ritch and Hail. invested $4,000 or the
money of the estate in the debenture STOCK OF 'ie
company the total issue of debenture STOCK anlou"t-
ing to s1O92,O ,OOO, Upon the settlement OF the ac-
counts of the trustees the Surrogate Of New-1 orK
County declared that the investment by Kitten anu
Hall in the stock of the Umbrella Trust was Illegal
and unauthorized. and refused 10 credit them with
the amount of this investment. AS the effect Of
this was that the trustees would be compelled 10
pay the sum out of their own pockets they ap-
pealed to the Appellate Division OF the supreme
Court from the Surrogate's decision
The case was transferred from the First to the
Second Department, and heard in March
Justice Willard Bartlett wrote the opinion OF the
Court affirming the order of the Surrogate. and
all the other Justices concurred. In this opinion
the Umbrella Company is characterized as a trust
and the Court holds. without qualification, that the
investment of the funds in such company was
illegal and unauthorized.
The paragraph of the will Of Alvah Hall under
which the trustees acted read follows;
And 1 hereby give my said executors and trustees
hereinafter named full power to reinvest the pro-
erty) or other aforesaid In any security real
or personal which they may deem TO be for the
benefit of my estate and calculated to carry out the
intention of this my will
The Court comedies that the clause of the will
quoted conferred upon the executors power to In
vest the funds of the trust estate in securities
other than those ordinarily approved as trust In
vestments. but the Court adds:
Here the money of the estate. part of which be-
longed to infants, was really embarked in a busl-
ness enterprise of a novel character. involving
great risk. shown by the collapse of the
seems to me misuse of language to apply the
, term security to the debenture stock which was
issued to the appellants evidence that they had
put the money of their cestui que trust into this
an investment in any security, contemplated by
the seventh paragraph of the will, but really
contribution of money of the estate to be used
capital in risky industrial undertaking.