Court Opinion

ID: 6379085
Source: CourtListenerOpinion
Date Created: 2022-06-24 23:58:27.433953+00
Date Added: 2024-06-11T15:50:17.463444
License: Public Domain

Segal, Assistant Deputy Attorney General,
You have asked to be advised on the application of section 1111 of the Banking Code of May 15, 1933, P. L. 624, to assets which were purchased by the commercial department of a bank and trust company prior to July 3,1933, the effective date of the Banking Code.
Section 1111 of the Banking Code provides as follows:
“Limitation upon Purchase or Exchange of Assets of Commercial Department. — A bank and trust company shall not, directly or indirectly, purchase with funds held by it as fiduciary, or exchange for any real or personal property held by it as fiduciary, any asset of its commercial department, but this prohibition shall not apply in the case of bonds or other interest-bearing obligations of the United States, of this Commonwealth, or of any county, city, borough, township, school district, or poor district of this Commonwealth, nor in the case of assets of its commercial department earmarked for future trust investment at the time of acquisition by the commercial department, and purchased or exchanged, within one year after acquisition, with funds or for property held by it as fiduciary. A report shall be made monthly to the board of directors and to the department of all transactions, including earmarked acquisitions, within the exception to the foregoing prohibition.”
It is clear under the terms of this section that no transfers of assets, other than those expressly specified therein, may be made from the commercial department to the trust department of a bank and trust company. No exception, express or implied, is made with respect to assets acquired prior to July 3, 1933. Except for the types of government obligations listed in the portion of section 1111-quoted above, no asset of the commercial department of a bank and trust company, regardless of when acquired, may be purchased with or exchanged for funds or property held by the bank and trust company as fiduciary, unless such asset was earmarked for trust investment at the time of its acquisition by the commercial department and unless the transfer to the trust department is made within 1 year after the acquisition of such asset by the commercial department.
You have suggested the possibility that assets acquired by the commercial department of a bank and trust company prior to July 3, 1933, may be earmarked after that date for future trust investment. Such a procedure would be in conflict with the express terms of section 1111 of the Banking Code. That section specifically prohibits the transfer from a bank and trust company’s commercial to its trust department of any assets not earmarked for future trust investment “at the time of acquisition by the commercial department”.
Therefore, we advise you that section 1111 of the Banking Code applies to assets acquired by the commercial department of a bank and trust company prior to July 3, 1933, with the same force as in the case of assets acquired after that date.
Prom C. P. Addams, Harrisburg, Pa.