this mode of authorization to securities of private corporations; and it has never, under the present Constitution, attempted the regulation of this properly-judicial matter otherwise than through the courts.

Lately an association, consisting mainly of laymen, the State organization of banks and trust companies, have taken action in favor of direct legislative permission to invest trust funds in the securities of private corporations.

It is probable that in recommending for enactment, in this State, New York legislation on the subject, they have not had in view the effect of our constitutional limitations.

As the matter is quite important, it is worth while to orient the whole situation, so that no false step need be made at the start, but a good old way pointed out on which we may move securely forward. The primary duty of the trustee is to keep trust funds employed and make them productive. On default, he may be surcharged, though the funds are so small as to make investment difficult (Pa. authorities in 22 P. & L. Dig. of Dec., column 38,682).

By section 4 of the Act of March 27, 1713, reestablishing the Orphans' Court (1 Sm. L. 81), any executors, administrators, guardians or trustees may, by the direction of the court, put out their minors' money to interest upon such security as the court shall allow of; and if such security so taken bona fide and without fraud shall happen to prove insufficient, it shall be the minors' loss. If no such investment can be found by any one concerned, then said executors, etc., shall be responsible for the principal only, until it can be put out at interest as aforesaid. Proviso, that all obligations so taken from time to time shall be for one year or less. Proviso, no accountants shall be liable to pay interest but for the surplusage of the estate remaining in their hands when the accounts are or ought

or power

to be settled and adjusted, etc.

The Act of February 18, 1824, P. L. 25, repealed, so far as it supplied, the above, and was itself incorporated, with the addition as to surplus income from trust realty, in the Act of March 29, 1832, P. L. 190, sec. 14 (2 Pepper & L. Dig. of Stats., 3331) -our Revised Statute "relating to Orphans' Courts," which provides: When an executor, administrator, guardian or trustee has moneys to remain for a time in his possession or under his control. and the interest, profits or income are to be paid-away or to accumulate, or when the income of realty is more than sufficient for the purposes of the trust, he may present a petition to the Orphans' Court stating the circumstances, and the amount he is desirous of investing; whereupon the court may upon due proof make an order directing investment in the stocks or public debt of the United States or of Pennsylvania,

or of the city of Philadelphia, or on real securities at such prices, or on such rates of interest and terms of payment respectively as the court thinks fit; and in case said moneys shall be invested conformably to such directions, petitioner shall be exempted from all liability for loss on the same, in like manner as if such investments had been made in pursuance of directions in the will or other instrument creating the trust; nothing in act authorizes court to make order contrary to the direction contained in any will or other instrument in regard to the investment of moneys.

By the Act of May 8, 1876, P. L. 133 (2 P. & L. 3333), the foregoing is

"Extended so as to include all bonds or certificates of debt now or hereafter to be created and issued according to law by any of the counties, cities, school districts or municipal corporations of this commonwealth, which are hereby declared to be legal investments of moneys by executors, administrattors, guardians or trustees."

The object of above legislation is, not to restrict fiduciaries to investments specified therein, and require them in all cases, without exception, to be made under the direction of the court, but to point out a course free from risk; not to interdict every other mode of investment. The history of the State debt shows that the acts did not benefit the estates between 1824-1832 and say 1846. Their purview was to protect the trustee, to restrain loans on merely personal security, and approve the only forms of permanent investment then (1824, 1876) having any title to be authorized generally. This approval also enlarged the demand for them. They were all obtainable at remunerative rates at the dates of the acts.

It will be borne in mind that these acts related only to Orphans' Courts. It may be that one purpose of the act of 1713 was to relax or override the English Chancery rule then but recently formulated (and probably adhered to by the courts of equity erected under the provincial acts or edicts of 1701 and 1707), and to permit loans on personal security; but the Orphans' Courts then and later were regarded as inferior courts not having any "implied powers.” To attribute to them power to control investments proposed or threatened by a fiduciary who is subjected to their jurisdiction by a plenary statutory grant seems to this day, to many lawyers, inadmissible. While the whole profession were unfamiliar with the administrative powers of a court of equity, there can be no doubt that such powers were vested in the courts of Common Pleas and Supreme Court by e. g., the grant of chancery powers over the estates of persons non compos mentis, in the Constitutions of 1776 and later epochs, and in the legis lative grants of equity jurisdiction over trustees.

Evidently it was considered that the provision incorporated in the Revised Act of June 14, 1836, sec. 33 | (P. L. 628): that "common pleas shall have the same powers and authorities and shall" use the same procedure as Orphans' Court, was enabling rather than restraining. However, our great equity judges like King and Gibson never mistook the bearing of these merely affirmative statutes as to investments. Barton's Estate, 1 Parsons, 24; Twaddell's Appeal, 5 Pa. 15; Nyce's Estate, 5 W. & S. 254, at pages 256-8; Worrell's Appeal, 9 Pa. 508. The two last were purchases of stock-U. S. Bank and Schuylkill Navigation-and credits were disallowed. In Hemphill's Appeal, 18 Pa. 303, also U. S. Bank stock, the court states facts "sufficient to put the trustees on their guard, and to prevent them from risking the trust fund." The English rule, as adopted in New York and New Jersey, is thus stated: tee can only protect himself from risk when he invests the trust fund in real or government securities, or makes the investment in pursuance of an order by the court. Did C. J. Black mean to say that here the risk means that of an insurer?

a trus

Perry on Trusts, sec. 452: Trustee ought to invest in government or State securities, or in bonds and mortgages on unincumbered real estate. The rule is not inflexible, but subject to the higher rule that the trustees are always to employ such care and diligence

as careful men of discretion

and intelligence employ in their own affairs. And see Hill on Trustees, p. 376, sq., 4 Pomeroy Eq. Jur., sec 1071 sq. This author or his editor asserts (sec. 1074), that the principles of equity forbid trust investments in the bonds or other securities of private corporations. This must mean private corporations of to-day or yesterday.

By Lord St. Leonard's acts, 22 and 23 Vict. 35, 23 and 24 Viet. 38, the strict English rule was enlarged by permitting investments in Bank of England or Ireland, or East India stock, or such other stocks, funds or securities as the court shall think fit.

An entire change of circumstances may change the duty of a trustee, even under testamentary direc tions, and why not, where a merely affirmative, permissive statute, eighty years old, is the only author ity to limit or inform his discretion? Perry. sec. 460, p. 651 (5th ed.); Hill on Trs., p. *369.

Public policy in England favored investments in consols: Barton's Est., 1 Parsons, 24; Perry on Trusts, sec. 455; Brown v. Wright, 39 Ga. 96, citing Story Eq. Jur., 1269-1275. Until Lord Leonard's acts, even the power to lend on mortgage was doubted or denied: Perry, sec. 457; Hill, *377. Perry said (sec. 456), that New York and Pennsylvania were the only States in which the strict English rule was held to. He describes the very liberal Massachusetts practice; and see sections 459, 460. Has New

Jersey, like New York and the mother country, enlarged the old rule to meet modern conditions?

It would clearly be inadmissible to say that the reasoning of Rush's Appeal, 12 Pa. 375, properly construing the enabling directions of a particular will, can be applied to these constitutional provisions restraining for all time the grant of legislative privileges or immunities, and seemingly making the control of trustees and the regulation of their investments a judicial function. Section 22 does not forbid, e. g., statutes authorizing loans on merely personal security. It does avoid all past legislation which it forbids for the future.

Does it avoid the bracketed parts of the following act, special to the investing corporation, but not singling out as a legislative favorite any particular corporation's bonds or stocks? Act of April 8, 1829, P. L. 142, sec. 1: Lawful for Pa. Co. for Insurance on Lives, etc., to invest its capital stock and all moneys received for premiums of insurance and for the grant and sale of annuities and endowments, in trust and on lives, or for any other transaction authorized by the act (its charter), in the funded debt of the U. S. or of any of the U. S., or of any city or incorporated borough of this State [or in the stock or loan of any chartered or incorporated canal, navigation, bridge or road company that now is or hereafter may be incorporated by this State or the U. S.], or in the purchase of any ground rents or mortgages, or on any loans on good and sufficient security, or in such real estate as may be taken in execution for debt.

The charter authorized deposits in trust at guaranteed rates of income or interest not less than 4 per cent. on sums of $100 or more, and not ex eeding the legal rate; surety for trustee not required, "but all investments of moneys received in trust shall be at the risk of said corporation,"

etc.

A like query occurs as to the following act, general in form, applying to all corporations having sinking or surplus or other funds to invest, and to all good corporation stocks, etc., without discrimination: 1868, March 31 (P. L. 50); Pa. corporations, including transporters of merchandise and other property, may invest surplus or other funds or earnings in mortgages on improved real estate, in ground rents, in the loans of the U. S., in the purchase from the holders thereof of any of their own shares; also in the public debt of Pa. or of the City of Phila., or in other good stocks or securities.

Unquestionably the following favorites were struck off the protected list: Act of 1870, April 1 (P. L. 45), sanctioning investment of trust funds in bonds and stock of P. R. R. Co.; Act of 1871, Feb. 17 (P.

L. 56): private corporations created by or doing business in Pa. may subscribe for or purchase the

capital stock and bonds of the American Steamship Co. of Phila. The avoiding clause of section 22 would prevent the application of any trust funds to the enterprise promoted by this act.

Act of 1872, March 29 (P. L. 31), sanctioning Phila. & Reading bonds; Act of 1873, April 4 (P. L. 59), sanctioning P. R. R. bonds secured by second mortgage.

In Kaiser's Estate, 33 Pgh. Leg. J. 62, Over, J., in 1885, said of the Orphans' Court: "This court has jurisdiction of the trust estate, and within the orbit of its jurisdiction has all the powers of a court of equity."

And he proceeded to decree, on original bill or petition, filed by succeeding trustee, subject to rights of bona fide pledgee for value, restoration of trust assets. This is clearly warranted by Supreme Court cases decided before and since. He cited Brooks's Appeal, 102 Pa. 150, 153-4. We may now add Marshall's Estate, 138 Pa. 285; Tyson's Estate, 191 Pa. 218; Mulholland's Estate, 154 Pa. 491; Watt's Estate, 158 Pa. 1; Mustin's Estate, 188 Pa. 544 (directions to lay out trust money); Tyson v. Rittenhouse, 186 Pa. 137, and cases there cited. The question was the construction of the will, and it was ruled that the Orphans' Court had exclusive jurisdiction, and "its final decree [in a plenary suit in equity] must end all controversy." That the person who had wrongfully withheld the assets was dead was immaterial, though mentioned as a makeweight by the court below.

In Delbert's Appeal, No. 2 (83 Pa. 468), the defendant, Huber, set up no adverse title, and under the above authorities the court had jurisdiction to decree delivery of the securities. If he was merely clerk or servant of former trustee, and there was no successor to whom he could have delivered and ac

The vexed subject of trust investments could and should be cleared up and put on a more satisfactory and up-to-date basis by a well-drawn statute, devised not in the interest of banks, trust companies or promoters, but in the interest of trust estates. Indeed, such statute should not be confined to this one phase of an increasingly important branch of equity jurisdiction. A large part of the administration of trusts has been obscured by the failure of the profestion to seek the sources 99 in the English and best American authorities; the natural and proper refusal to follow rivulets of error in Maine, California, Texas, etc., and the inability-quite natural, but not proper to see the scope and effect of the grants of equity jurisdiction to the Orphans' Courts and Com

mon Pleas.

As is shown above, at the date of the original statute now incorporated in the revision as section 14 of the Act of March 29, 1832, P. L. 190 (supra), the Orphans' Courts were not regarded as having authority, inherent or implied, as an incident of their full jurisdiction over certain trusts and quasi-trusts, to protect the estate and the trustee by directions as to important matters of administration, or by injunctions preventing devastavits threatened because of mistake of law-erroneous construction of a will or the like. In the leading case denying the authority, Willard's Appeal, 65 Pa. 265, the decree below went academically, and unnecessarily, and, it would seem erroneously, into a complexus of mere contingencies, instead of dealing only with present emergencies and ascertained rights, and retaining the cause, if advisable, "for further directions;" so that the Supreme Court were obviously impressed with the impolicy of conceding even the power supposed to be exercised in England. But it is submitted that there is no such thing there as a decree on prop

him, but for him.

In Harrisburg Bank's Appeal (84 Pa. 380), the policy was to decedent's executors, etc. Its net proceeds were therefore assets of his estate wrongfully withheld. The like notice, monition, citation, in

substance, and no other process, would go to the foreign guardian as on a bill in the common pleas. The bill or petition in the Orphans' Court would be a plenary suit in equity.

These two cases are overruled in principle by the later cases. Mulholland's Estate, 154 Pa. 491, is especially cogent (p. 499 sq.). Ake's Appeal, 74 Pa. 116, denies jurisdiction to correct incidental mistakes-repeatedly exercised since: Hopkins's Estate, 11 Phila. 42; Kreimendahl's Estate, 17 Super. 496, and cases there cited. See, also, 22 Pepper & L. Dig. of Dec., col. 24,360 (310); col. 24,364-6, and cases there cited.

against all proper or necessary parties.

Tyson's Estate, 191 Pa. 218, is as fully as any English case a "bill for the construction of a will" -the relief prayed for, which involved the true construction of the will, being injunction, mandatory as to the personalty (p. 220, pl. 8). Whether declaratory clauses were incorporated in the decree finally made or not, the interests brought in or represented were concluded by the construction on which the adjudication was based.

Morton's Estate, 201 Pa. 269, and Jacoby's Estate, 201 Pa. 442, were bills to prevent the misapplication or improper retention by the trustee of income of realty. The construction of the wills on which the granting or refusal of the relief depended could not bind all interests, if given in respect to a balance of income covered by an account, and in distributing such balance, except as to that little sum of money. The filing of the petition and the process

based thereon bringing in all interested pro and con, was a provision for an adjudication in the ordinary course of litigation, the ulterior effect of which would have been to conclude all parties so brought before the court, but no others, on the question who was entitled under the will to the income afterwards to

accrue.

While there are a multitude of particular statutes containing narrow grants of jurisdiction to the Orphans' Court, the grants in the Revised Act, June 18, 1836 (P. L. 784, I, II, III, VIII), support the decisions to the effect that its jurisdiction is plenary and exclusive for the administration of the trusts which these heads refer to.

Must we, to-day, say, with CONYNGHAM, P. J., in Morris v. Wallace, 3 Pa. 319-after the lapse of eighty years, the total change of available and approved investments, the course of legislation and decision attributing the broadest incidental equity powers to the Orphans' Court, and the new constitutional provisions—that "the legislature have, in the character of stocks in which investments may be made, thought it proper and necessary to limit even the discretion of the court" (p. 321). This would be a very curious result of the Act of 1824-1832, since the same judges, sitting on the equity side of the Common Pleas, are not bound by it or any like act in administering similar trusts.

In Barton's Estate, 1 Parsons, 24, 26, KING, P. J.. assumed (1842) that the act restricted the Orphans' Courts to the securities it designates. And such is the law if the act is the only source of that court's power and discretion to direct investments.

In Noble's Estate, 33 Pgh. Leg. J. 113, where HAWKINS, P. J., said the Orphans' Court has no power to authorize nor ratify investments outside of statutory securities, the investments were loans on merely personal security.

And in Horne's Estate, 41 Pgh. Leg. J. 294, approval was withheld by Judge HAWKINS, without mentioning want of jurisdiction as a ground, but because the will did not permit the investment. This eminent judge suggested or approved the course followed in the court below in Morton's Estate, 201 Pa. 269, supra, held by the Supreme Court (erroneously it is respectfully submitted) to be beyond the power of the Orphans' Court, and by parity of reason of all other courts of equity in this State at the present day.

The fourteenth section of the Act of 1832, P. L. 190 (supra), provided only for directions by the Orphans' Court. It must be conceded at this time of day (perhaps it was conceded in 1713, 1824 and 1832, but afterwards forgotten) that the Common Pleas and Supreme Court, under the general, plenary grant of chancery powers over trustees and their accounts. already had the power generally, as an

incident of the jurisdiction conferred by this grant. If it be true that the Orphans' Court has this authority outside of the Act of 1832, sec. 14, as bound up in its plenary power over trust assets derived from decedents or belonging to minors, etc., it seems to follow that it has power and discretion to go beyond the old forms of investments (consols in England, in this country U. S. bonds or State or municipal obligations-sometimes turning out very badly), taking judicial notice of the fact that these are practically unobtainable at rates that make them worth while, and that the well-informed and conservative part of the world of finance recognizes in many modern securities that meet certain familiar tests, investments as safe or safer than many State and municipal bonds. The high prices of the latter are not so much due to intrinsic merit as to the competition of trustees for them.

An act firmly establishing the power of the Orphans' Courts and of the other equity courts of the State to decree relief on bills, the object of which is to obtain the construction of wills or other dispositive instruments, or directions as to investments, etc., etc., whether such bills be filed by trustees or against them, would pave the way for a better system than can possibly be built up by hard-and-fast statutory regulations; not amendable, practically, until after the mischief has happened; necessarily difficult of construction and application, and of very doubtful constitutionality.

The two clauses quoted at the beginning of this article. especially that from section 7 of Art. III of the Constitution, seem to remove the whole matter from anything like specific or minute regulation by the legislature, and to commit it to the courts of equity, which are best fitted to deal with it. Histor ically, it is purely a judicial matter.

No doubt the attitude of courts asked to approve a new investment would be severely critical, and the disposition would be in sanctioning it to indicate to trustees, that the court's present permission, approval, direction, does not absolve them from the duty of watching future developments. In the case of consols in England, if not in the case of government bonds in the United States, there is the ingredient of policy and patriotism; so that though the vicissitudes of world-politics, wars and rumors of wars, cause losses on reconversion, the immunity of the trustee is probably absolute. On the other hand, when the bona fides and reasonable diligence of the trustee, even on the first decisive step, are left open questions, honest trustees may suffer by the difficulty of putting clearly in evidence the conditions which legitimately influence them-of reproducing for the court the point of view of a longpast time; and many dishonest trustees may profit by active deceit or concealment, by the fear of liti

But, for another reason, the attempt to frame specific statutory regulations is uncalled for, at least so far as trust companies are concerned. Not only has the Commissioner of Banking a power to approve, or to criticize and condemn, clearly conferred by an act of unquestionable constitutionality, but the courts have a similar and concurrent power, expressly conferred by statute and accepted by stipulation. This visitorial power can be exercised by specific directions based on reports of examiners or auditors, or by general rules designating certain securities (that have stood the tests prescribed by such rules, or applied by the court in some other way) as fit investments until further order. Individual trustees taking investments so sanctioned would no doubt be accorded practically the same degree of immunity as trust companies. It is of course desirable that not only the different courts, but the Banking Department, all act in harmony on this subject. cannot be doubted that a judicious foresight would protect trusts and honest trustees much better than the present method of leaving their good faith and reasonable diligence to be affirmed or denied upon the impressions a judge may be able to get from a look far backward over a complex record of halfforgotten facts, often further confused by mistaken or perjured testimony.-Legal Intelligencer (Phila.).

: 0:

Literary Notes.

It

The North American Review for January 4th ushers in a new year in its existence with a very distinguished table of contents. Mark Twain, in the ninth instalment of his Autobiography, has some notable pages touching Secretary Root's recent threat of obliterating State lines. In the same number he also tells, in his own vivid manner, how in his youth he served as a mesmerist's "subject." "What is Esperanto?" is the title of the most remarkable article that has yet been published concerning the new international language. It is a special appeal to America by Dr. L. L. Zamenhof, the inventor of the language. In "German Designs on Holland and Belgium," M. Yves Guyot, the famous French publicist, shows how inevitably Germany is bound to strive for the annexation of the Low Countries. Osborne Howes, Honorary Japanese Consul in Boston, shows in "What Japanese Exclusion Would Mean " that such exclusion would, commercially speaking, cost America heavily. "Three Years and a Half of Pius X" is a terrible arraignment of the present Pope, by a Catholic Priest, who charges the incumbent of the Holy See with despotism such as prevailed in the Middle Ages. The Case of Sena

66

article, showing the status of the Mormon Senator who has occasioned so much controversy. Anatole France" is the title of a brilliant appreciation of that celebrated Frenchman, by James Huneker, himself a very clever man of letters. "England's FoodSupply in Time of War" is an interesting article on that subject by Lieutenant Carlyon Bellairs, R. N. Eugene Smith, President of the Prison Association of New York, contributes a comprehensive article on modern methods of dealing with criminals, entitled "The Old Penology and the New." In the literary department, Lord Rosebery's "Lord Randolph Churchill" is reviewed by Gertrude Atherton; Hazelton's 'Declaration of Independence," by J. Boyd Thacher; and Mistral's "Memoires," by Alvan F. Sanborn. In the Esperanto department appears the second instalment of primary lessons in Esperanto.

The author of "The Slave of Silence." Fred M. White, is one of England's popular writers of ingenious mystery stories. Discussing the subject of ideas for novels, he said recently: "I recollect some years ago in fine weather looking out of a back window and seeing a clothes line. Noticing that the line sagged-the reason being that it had not been in recent use--and remembering that directly a clothes line gets wet it comes up like a harpstring, I at once exclaimed to myself, Here's a motive. By some means or another a man fainting or wounded falls in a mesh of cord that is loose and hanging down. There is a kink in the cord. rain descends, the cord tightens, and the man is strangled. Subsequently the rain ceases, the cord loosens, and the body drops to the ground. This would be a death difficult to account for, wouldn't it? I utilized the notion in my book entitled The Cardinal Moth,' which attracted the attention of King Edward."

Nathan C. Fowler, Jr., who, with the co-operation of nearly one hundred representative American business and professional men, is responsible for "Starting in Life," a new book of practical advice for ambitious boys, written along new lines, is a "Cape Codder" by birth-Yarmouth, Mass.. being his native town. Mr. Fowler's varied but successful career as printer, editor, publisher, advertising manager and counsellor, has brought him in contact with Mr. Fowler says: leading men in all walks of life. "I would not have written this book, or have assumed the distribution of advice, if fortunate conditions and environment had not made me a clearing-house of experience. Over twenty years ago I originated and established a business profession, in the practice of which I was brought into direct conin tact with the methods pursued the leading trades, businesses and professions. I was given con