as his clerk. The company assumes no relation to the layman client. Counsel assumes the professional obligation of personal morals and learning involved. When he employs a corporation to assist him he but substitutes trained and organized for untrained and perplexed assistance. Recent legislation on this subject may therefore be regarded as merely confirmatory of the common law. It is useful, however, in clearing any doubts that may exist in the minds of those who look upon statutory enactments as all-embracing. An example of such confirmatory legislation is found in the amendment to Section 280 of the New York Penal Code enacted by the 1916 Legislature (Chap. 254, Laws of 1916). This amendment is as follows: "Nothing herein contained shall be construed to prevent a corporation from furnishing to any person, lawfully engaged in the practice of the law, such information or such clerical services in and about his professional work as, except for the provisions of this section, may be lawful, provided, that at all times the lawyer receiving such information or such services shall maintain full professional and direct responsibility to his clients for the information and services so received. But no corporation shall be permitted to render any services. which cannot lawfully be rendered by a person not admitted to practice law in this state nor to solicit directly or indirectly professional employment for a lawyer." From its "Act to Prohibit the Practice of Law by Corporations" (Chapter 292, General Acts, 1916), Massachusetts excepts corporations "lawfully engaged in assisting attorneys at law to organize corporations" as well as title companies. By the terms of this act banks and trust companies are permitted to give legal advice on investments and taxation. CHAPTER XVIII External or Foreign Business § 129. In General. The doing of business by a trust company at points other than at its home office encounters two classes of legislation, namely, laws of the domicillary state which limit the right to operate branch offices, and laws of foreign states or countries which deny or prescribe terms for the admission of foreign corporations. The necessity of compliance with these laws rests upon the character of the activity contemplated or performed in the foreign state or country. The method of compliance will depend upon the laws themselves and the extent to which the company desires to operate abroad. It may be required to qualify as a foreign corporation generally, or under laws particularly applicable to trust or other fiduciary companies, or by furnishing security to a foreign court with reference to a particular trust, or it may operate through a domestic corporation whose stock it owns or indirectly controls. All of these things turn, very largely, upon statutes. The purpose of this chapter is to discuss the principles involved. A guide for admission of foreign trust companies has been compiled in alphabetical order of the various states and is printed in the last pages of the appendix. We are merely concerned in this work with the status of the fiduciary company, but it is interesting to note that a corporate client from a foreign state will not be "doing business" in the trust company's state by employment of the trust company. Thus it has been ruled that the making of a collateral trust mortgage does not bring the debtor corporation within the restrictions applicable to foreign corporations.' As to formalities of proof in foreign states of right to act as fiduciary, see the case cited.1 § 130. Prima-facie Presumption that Trust Company has the Power to Execute a Trust in a Foreign State. In an action 2 brought by a New York trust company in possession of a railroad in Wisconsin, under mortgage foreclosure, to recover on a policy of insurance for the burning of a dredge boat fastened to the wharf of the railroad company, the capacity of the trust company to take such a trust was attacked. Of this the court said (italics supplied): "The act of incorporation fully authorizes a trust created by deed such as this was. Whether they could hold real estate in Wisconsin would depend on the statutes of that state. In the absence of any proof of a law to the contrary, we must presume that the company had authority to execute the trust, which by their charter they had power to undertake." § 131. Branch Offices. Legislation of the domicillary state or of the foreign state may limit or prohibit the establishment of branch offices by a trust com 1. Union Trust Co. of Rochester v. Sickles (1908), 125 N. Y. App. Div. 105, 109 N. Y. Supp. 262. 12. Central Trust Co. of Illinois v. Hearne (1916), West Virginia, 88 S. E. 450. 2. Farmers' Loan & Trust Co. v. Harmony Fire and Marine Ins. Co. (1868), 51 Barb. 33, affirmed without opinion in 41 N. Y. 619. 3. Sec. 195 New York Banking Law, Appendix page 302. pany. Power to establish such offices, however, may be implied, in the absence of restrictive statutes. Thus with respect to the Freedman's Savings and Trust Company, incorporated in the District of Columbia under act of Congress, and which had established branches in various states, it was held that: "The corporation thus created might well do business, under the comity of nations, in any state in the Union in which the business was in other respects lawful." It was the further opinion of the court that there was no reason why depositors of the Nashville branch could not bring action in the state courts upon insolvency of the company. The corporation being a nonresident, it might be proceeded against by attachment. The several branches are not considered as distinct, so that a claimant is limited to the assets of a particular branch. As to the powers of the manager of a trust company branch, see the case cited.. § 132. Exclusion of Foreign Trust Companies -Need of Special Laws for Admission in Some States. The Supreme Court of Errors of Connecticut has held that as foreign corporations could not be admitted to do business in that state for purposes not permitted to domestic business corporations, and domestic corporations could not be organized to transact the business of an. executor or administrator unless "as incident to the business of a trust company," it followed that a foreign 5. Hadley v. Freedman's Savings and Trust Co. (1874), 2 Tenn., Ch. 122. 6. First Nat. Bank v. Union Trust Co. (1913), Tex. Civ. App., 155 S. W. 989. 62. Union Savings & Trust Co. of Seattle v. Krumm, Wash., 152 Pac. 681. 7. Farmers' Loan and Trust Co. of N. Y. v. Smith (1902), 74 Conn. 625, 51 Atl. 609. But see legislative change since this decision in Appendix post. 8 trust company could not act as an executor in that state. Mandamus by a mortgage company organized under the banking laws of New York to compel the Secretary of the State to issue a certificate entitling it to do business in Michigan, was also denied. Although the corporation involved in this case was not a trust company, the language used by the Michigan Supreme Court would seemingly include foreign trust companies in the class to which admission would be denied. It said that "banking corporations and those corporations which are within the contemplation of our banking laws are not within the provisions of the act authorizing foreign corporations to transact business in this state." 9 Michigan trust companies are organized under laws relating exclusively to trust, deposit and security companies. Official supervision and control was provided for them, but not for foreign corporations of the class seeking qualification. To admit this foreign corporation by mere compliance with the general foreign corporation laws would, in the opinion of the court, give the foreign corporation an unfair advantage, and operate as an imposition upon the citizens of Michigan. 10 A New York case1o held that a foreign trust company was not authorized to act in fiduciary capacities, in the mere absence of prohibitive legislation. The court said: "It seems almost like impugning the intelligence of the Legislature to presume that it intended-by the absence of prohibition alone-to allow all foreign trust 8. New York Mortgage Co. v. Secretary of State (1907), 150 Mich. 197, 114 N. W. 82. 9. Act 108, 1889, as amended. 10. Matter of Avery (1904), 45 N. Y. Misc. 529, 92 N. Y. Supp. 97: Since the rendition of this opinion the New York law has been amended so as to provide for admission of foreign trust companies as executor or trustee under a will. N. Y. Banking Law, Sec. 223, Appendix page 326. |