CHAPTER I

INTRODUCTORY

§ 1. Scope of This Work. That phase of business life which has grown out of its equitable principles in regard to trusts, has received greatly the attention of American law makers. Legislation along these lines proceeds not only upon the theory of defining the contract relationship of parties, but also upon that of public policy in the restraining of artificial beings created by law to prescribed functions in and about such relationship. It also enacts particular procedure as to violated right for and against such beings, all of which will be considered hereinafter from the standpoint of general principles, assisted as far as may be by such adjudicated cases as I have discovered.

While distinction as to application of principle so far as individuals and corporations are concerned constantly will be stressed, necessarily the discussion often will involve primary rights as between man and man and such evolution of Equity jurisprudence as modern conditions require.

I know of no book, yet appearing, of this nature, though there have been several very excellent books giving the history of legislation in regard to these corpora

tions and pointing to the great growth in America of corporate effort in a field where confidence was formerly reposed only in individuals. These individuals were chosen because of fitness and integrity in and about the performance of the trust duties imposed. Duties of this nature, therefore, formerly would not take kindly to the thrusting forward of oneself, but would wait upon selection by the creator of a trust. When corporations enter on the scene, the aspect of things become wholly changed. They roffer showing of their equipment for successful performance and financial responsibility behind their offers to perform.

It has been debated pro and con whether corporations were preferable or not to individuals in such relations, but all I am here concerned in is knowledge of the fact that the law recognizes corporate trustees, and whosoever chooses to avail himself of their offer of services is at liberty to do so. The rule of stringency in measuring their liability may be deemed to be invoked by them, because of the way they hold themselves out.

Of course, the equipment of which I speak may call for more than is found in other kinds of corporations. The confidential nature of his duties may prevent to some extent the procuring of the relation of trustee on a purely business basis. There is advice and solicitude in particular cases to be regarded and sentiment to be considered. These call for officials of different characteristics than the calculating corporation ordinarily presents. If the latter has no red blood in its veins, its agents, through whom only it acts, should appreciate pulsations of sympathy and truly interpret the intentions. of trustors. The law is not as dry as dust in all of these

matters.

It is conceivable, therefore, that a corporate trustees' board may sometimes be vested with discretion, which calls for the possession of other attributes than business acumen or experience. Hard and fast rules should not apply to the management of every trust. For example, a minor's guardian might with advantage be something more than a mere legal abstraction and so, on occasion, it might be in other instances.

Finally, it may be stated that all of the fiduciary relations which corporations assume as expressly authorized by statute, or which the law otherwise permits them to assume, I will endeavor to expose and declare according to the principles of law and equity, to see how far this legislation corresponds or departs therefrom; that is to say, how it is declaratory of these principles or introduces other law opposed thereto.

In this work I hope to be of assistance in the interpretation of this legislation and in defining what it may embrace of things not specifically provided for. My. inquiry invokes the maxim, "the old law, the mischief and the remedy." The old law on these subjects is that of intrinsic right and its application in a branch of equity. The mischief may consist, as claimed, in the uncertainty about the life and continuing responsibility of individual trustees, their adaptability and training for the duties imposed. The remedy is the removing of this uncertainty. That often there may exist this uncertainty as to individual fiduciaries, no one may gainsay. Besides all of this, to make provision for corporate trustees compels no one to resort to them. It but amplifies the rights of owners in the selection of their agents and particularly defines, or tends to define, the duties and obligations of the latter.

§ 2. Desirability of Uniform Laws. Considering that all of the legislation above referred to is to vest in corporations the right to hold themselves out to the public in and about matters coming under the police powers of the State, and that the interrelations of citizens of different states are more intimate than under former conditions, it becomes apparent that there ought to be uniformity therein throughout the states. Such legislation, essentially, is of the adjective rather than of the substantive law of a commonwealth. It comes under the same quality of public policy in one state as in another. There are no intrinsic rights involved, yet it affects in great measure the general commercial rights of citizens of all states.

Furthermore, as the adjective quality of this legislation concerns general principles of universal application, rather than statutory remedies, it ought to be as broad in application as are those principles. When adjective law varies in its provisions, this is but diversity in detail, and yet it might make a great difference in results, and provoke contrariety in ruling of substantial importance.

Still further, as there is practically the same need in different communities for these corporate agencies, why should there not be uniformity as to their organization, powers, restrictions and safety? The rule of construction, that what is expressed excludes what is unexpressed, especially is important as regards the detail of such statutes, and it is wholly unnecessary to subject statutes to the danger of variant construction by differ

ent courts.

This legislation being designed to meet a general rather than a local demand, it should not be gored by the reefs on the shores of different states, but should sail