The Bridgeport times and evening farmer., 1919-11-21
SAVINGS BANKS CAN'T INVEST IN
 N. Y. CONCERNS

Hartford, Nov. 21-In an opinion given out yesterday Attorney General Frank E. Healy said that no savings bank in this state, by reason of the existence or exercise of authority conferred upon 1t under its charter or by statute, has any legal right to acquire Arectly or Indirectly Class A or Class B stock in the Securities Corporation, as proposed to be form ed by the shareholders of the Ameri- can Exchange National Bank of New York city.
 Everett J. Sturges, state bank com missioner, requested the opinion of the attorney general on the matter and the opinion reads:
 You ask my opinion on the fol- lowing statement of facts:
 'HThe American Exchange National Bank of the city of New York, by committee of its stockholders is de- sirous of forming a securities corpor alton consisting of the same stock holders as are now owners of stock Tn said bank and issue the same stock certificate for stock in said bank and Class B stock in the securities corpor- ation. The Securities Corporation proposes to issue $2, ,OO0, 600 Class \ stock at $110 a share to be paid for in cash, and to give S2,000,000 Class B stock to stockholders in the bank in the ratio of one share of Class B stock for each one share of the stock in the bank held by such shareholder, each shareholder of the bank to waive any right to any special dividend declared by the bank in order that said special dividend may go to the securities cor poration in payment of it's Class B stock. This is proposed to be ac- complished by a, power of attorney and a written assent to be signed by the stockhoIder of the bank.
 Some of the stock of the Ameri- can Exchange National Bank is own ed by savings banks in this state, and you inquire if it is legal for savings banks in this state to acquire either Class A or Class B stock in this securities corporation under the pro- posed plan.
 Savings banks in this state are neither designed or adapted to aid commercial transactions. Their field of operations are restricted by every possible safeguard that the law can place around them, and these restric- tions are due to the fact that the real owners of the savings bank, the de- positors, have no authority in the con- trol or management of it's affairs This
 
 bank act in a fduciary capacity in conducting the institution, the income and profits of which belong to the de- positors, less any reasonable expense that may be incurred in running the institution.
 See Bank Commissioner V. Water town Savings Bank, S1 C.266.
 ''It must be conceded that neither one of these stocks Class A or Class B come within the provision of Chap ter 204 of the General Statutes which can be made by savings banks in this state.
 ''It is claimed, however, that Class B stock is a gift to the savings bank and not an investment by it and therefore, does not come within the provisions of Chapter 204 Of the Gen eral Statutes.
 "An examination of the claim that Class is a gift is disproved by the fact that it is proposed to be paid for special dividend declared by the American Exchange National Bank This special dividend, if declared, be- longs to the depositors of the say ings bank holding stock in the Am erican Exchange National bank and will go to their credit unless divert ed by a waiver signed by the treas urer of the savings bank.
 Tt must be conceded that what cannot be done directly in making investments by savings banks cannot be done indirectly having in view the same end to be accomplished
 'In Lowndes V. City National Bank S2 c. 19, the court says:
 "But a bank may not actively and knowingly participate in a misappro- priation of trust funds. It may not become an active cooperating agen- cy to that end, and by such cooper alton directly contribute to the con- summation of the wrong.''
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