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§ 89.

Where Cause of Action Arises with reference to Transfers by Transfer Agent. That a cause of action arises in the state where a transfer agent improperly transfers stock, was held in Toronto Trust Co. v. C. B. & Q. R. R. Co.30

The plaintiff was a corporation under the laws of Ontario, Canada. As successor trustee it sued the railroad to recover shares of stock, (with dividends), that had been transferred without authority by its predecessor trustee, and which, it alleged, the defendent and its transfer agent, the National Bank of Commerce in New York, knew the predecessor trustee had no power to transfer. Summons was served upon one of the officers of the railroad, also a foreign corporation, in New York. Motion to set aside the service was denied, because the cause of action arose in New York and therefore the New York courts had jurisdiction.

In Lockwood v. U. S. Steel Corporation," it was held that an ancillary executor of a non-resident, could compel the transfer of shares at the New York transfer office of a New Jersey corporation. The court said:

"The proposition for which the defendant contends is that shares of stock have their situs only in two possible places-either at the domicile of the corporation or at the domicile of the stockholder. In the present case, however, it is alleged in the complaint, and necessarily admitted by the demurrer, that the defendant maintains in the county and city of New York, an office for the purpose of receiving certificates of its corporate stock for transfer upon its books and of delivering new certificates

39. (1884) 32 Hun. (N. Y.) 190.

40.

(1913) 209 N. Y. 375, reversing 153 N. Y. App. Div. 655. See, also, 218 N. Y. Mem. 12.

when such transfers have been made. Does not this fact constitute New York the domicile of the corporation, to some extent at least-so far as the registry and transfer of shares therein are concerned? We think it does."

CHAPTER XIV

Trust Companies as Depositaries-Safe Deposit Companies

§ 90. Preliminary. Trust companies generally have a banking feature and a trust feature, and under statutes, of many states they may act as "bailees" for hire. Thus the Missouri statute1 authorizes them "to receive upon deposit for safe-keeping personal property of every description; to guarantee special deposits and to own or control a safety vault and rent the boxes therein," and to become a "depository." These functions import merely a common law liability, as to which no preference is given out of general assets or any lien upon a special fund, according to the usual phraseology of trust company statutes, nor is the vesting of power in a trust company to carry on this kind of business operative in any exclusive way to its being conferred on other corporation, for example, a safe deposit company, which would not be a trust company or have any power to carry on a banking business.

§ 91. A Trust Company as Depository. The distinction between a depositary and a depository appears to consist mainly in the fact, that the former is

1. R. S. Mo. 1909, Sec. 1124.

a public agency, while the latter arises in an ordinary contract of bailment, the bailor of a thing being also called depositor and the bailee thereof the depositary. We find this distinction in some statutory phraseology."

In the sense that depositaries are public agencies, and not strictly public officers, many statutes utilize corporations, especially banks and trust companies, for the deposit of public funds. In the sense that a depositary is not a trustee, the latter is vested with title and active management of the res, while the former has merely custody and care, with a possible or contemplated right of user. The liabilities, duties and degree of care obligatory on depositories and depositaries depend on various considerations not necessary here to be considered. These depend, however, on statutes and inferences therefrom or upon the nature of transactions from a contractual point of view.

A trust company is recognized as a banking institution under the general words of the bankruptcy statute, section 61, which provides for courts of bankruptcy designating "banking institutions as depositories for the money of bankrupt estates." This section required courts to exact from such banking institutions, bonds for the safe-keeping (of such moneys) (by the depositories), and in New York an interesting question arose whether or not the liability of a trust company depository was as a banking institution pure and simple, or under

2. Colquitt v. Simpson (1884), 72 Ga. 501.

3. S. D. Civ. Code 1903, Sec. 1353; Okla. R. S. 1903, Sec. 2825; N. D. Rev. Code 1899, Sec. 4001.

4. Thompson v. Whitaker Iron Co. (1895), 141 W. Va. 574, 23 S. E. 795; Roberts v. Stuyvesant Safe Dep. Co. (1890), 123 N. Y. 57, 25 N. E. 294, 9 L. R. A. 38, Am. Neg. Cas. 535.

the preference clause in trust company laws." The Court of Appeals held that the trust company statute was a state law not intended to include as trust funds deposits by Federal Courts in the banking department of a trust company, especially as the bankruptcy statute provided for the judges exacting a bond for their safe-keeping. In Missouri, and this state is taken merely as illustrative, the statute speaks of depositories, as "approved banks or banking institutions,' banking corporation, association or individual banker," "a bank or banks, trust company or trust companies," all showing equally as broad language as in the bankruptcy statute, supra, which as seen includes trust companies. From the Morris case it also appears that the trust company therein referred to must have been designated by the state comptroller as a depository for court funds, at least, or it would not have been selected by the federal court as a depositary, in bankruptcy matters. The Minnesota statute provided only for the designation of any national, state or private bank, and a trust company was designated.1o

The fact, therefore, appears that as a banking institution a trust company may be selected as a depositary for public funds and stand to them as such, while as to court funds it stands as a trustee. Of course, all of this is dependent upon the particular language of statutes. It may be thought, also, that when a statute makes the

5. Henkel v. Carnegie Trust Co. (1914), 213 N. Y. 185, 107 N. E. 346, reversing 154 N. Y. App. Div. 596, 139 N. Y. Supp. 969.

7. R. S. Mo. 1909, Sec. 11880.

8. Ibid., Sec. 9217.

9. Ibid., Sec. 9858.

10.

Board of County Commrs. v. Am. Loan & Trust Co. (1897), 67 Minn. 112, 69 N. W. 704.

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