The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-04-16
POINTS TO FLAWS
IN RESERVE ACT
John &. Johnson Says National
Bank Trust Feature Is
Unconstitutional.
BASIS FOR 4 TEST SUIT

John g. johnson, the lawyer OF pills
delphia. has given II as his opinion
that Congress has no power 10 confer
on national banks the right TO exer-
else the functions OF trust companies.
as provided In the Federal reserve act.
Mr.. johnson says further that even
though express permission be granted
by a State TO a national bank for the
exercise OF these powers the bank IL
still withou; constitutional right TO do
SO.
This opinion is regarded in the fnan-
cial community OF New York as Of far
reaching importance. tending 20 estab-
lisa firm basis of justification for the
trust companies In n test case which. IL
Is expected. will he carried to the SN
trust company figh, on the Federal re-
serve act will represent a united effort
10 protect state corporations.
The executive committee OF the trust
company section OF the American Bank
ors Association. headed by Czal II. Me-
Carter, prcsidou: of the Fidelity Trus.
Company " Newark. has the matter of
the suit IN charge. lie has urged that
the further granting Of trust company
powers to national banks under the
reserve act should be suspended until
the suit Is decided
Mr.. johnson In his statement made
public yesterday says:
In my opinion Congress has no
power to create corporation for the
special purpose Of acting as executor.
trustee, registrar. SC. or TO confer upon
the corporation which It has authority
10 create the power to do such things,
and thus 10 intermeddle with matters
prominently those to be tratss c ed
, with the state for the benefit OF it's
! QUEENS
III Congress has power 10 create a
corporation for such purposes the situa-
tion of the trust estates taken CharQ .
/ of by national banks will he anomalous.
! The bank as Federal creature IL sub
ject to Federal and not to state law.
II is very necessary that from time 20
time the affairs Of a trustee corporation
shall he subjected TO examination and
, adverse criticism by the parties inter
eStcd in the trust estates and by the
courts having jurisdiction OF the same.
What power viii the state courts
b have 10 investigate or in any way con-
troll. supervise or prescribe the actions
of a national hank or its officers" The
national bank must have a franch 81
which enables IL to do the things iu
! question Such franchise. ! think. Is
one which = utterly beyond the province
of Congress to confer
/ Nj. Johnson says that no express
power 10 create corporations Is con-
ferred upon Congress lie knows OF no
express power of Congress which rea-
sonably could he held to require or fairly
10 permit an iucoI porltion fer the pur-
poses in question.
, The right of Congress To incorporate
I national banks, he asserts. was found
by the supreme court IN a necessity 'c
| exercise expressly granted powers. II
| AZ the present time the doing of c.rtat:
. tnin.s has become al ordinary part "i
I q banks powers. wnich wer" NOT doe
. At tine time the supreme Court decided
/ that Congress Had power to create ma
,ional banks 1t does not necessarily fol-
! NV that bank may not now be ere
atcd with these additional powers.
AT the present time, however. -
7 SAYS. there is uo such custom or usage
a. makes the dong of the things 2psc
lied q necessary or ordinary or usIA
part Of a national banks transactions.
In my opinion the courts could ~"
fuse 10 appoint national banks AS irus
tees. oven though requested hy the p'I'
ties N interest could rcmov" them from
such trustceshipS, and would be obltse,
20 restrain them at the Instance "f thu.'
Interested In trust property.
Mr. Johnson says mat the ex-t'ts
Of trust powers by national banks u
open to attack from tine United STATE
itself. by any state, 10y any stoCkhold'
In a national bank and by any patron o
such institution.