as to the payment of any taxes or assessments, or to require such payments to be made, but the Trustee may, in its discretion, do any or all of these things."

Compensation of Trustee.

"The Trust Company shall be entitled to reasonable compensation for all services rendered by it in the execution of this agreement, and such compensation as well as all reasonable expenses necessarily incurred and actually disbursed hereunder the mortgagor company agrees to pay."

An express provision in the trust deed for "just" compensation has been held to exclude a statutory rule (Sec. 3320 N. Y. Code of Civil Procedure) providing for the compensation of a "trustee of an express trust.' It was thought that these rules did not necessarily apply to a mortgage trustee.18 Nevertheless, where a mortgage trustee had brought foreclosure proceedings and had brought considerable other litigation in behalf of the bondholders, he was entitled to compensation at the rate usually awarded to executors and administrators.'

19

A clause similar to the above does not give the trustee a lien on the mortgaged property to secure payment for services performed.20 Hence the advisability of inserting the next succeeding clause.

Compensation and Expenses as Charge Upon Estate.

"Such compensation and all expenses of pro

18. Miami Gas & Fuel Co. v. Mills (1913), 157 N. Y., App. Div. 542, 142 N. Y. Supp. 862.

19. Woodruff v. N. Y., L. E. & W. R. R. Co. et al. (1891), 129 N. Y. 27, 29 N. E. 251.

20 Mercantile Trust & Deposit Co. v. Pickerell (1888), 99 N. C. 139, 5 S. E. 417.

tecting the trust estate, and all legal and other expenses actually incurred by the Trustee, shall constitute a charge upon the hereby mortgaged premises, and the proceeds thereof paramount to the bonds secured by these presents."

See Mercantile Trust & Deposit Co. v. Pickerell,20 supra.

Resignation of Trustee.

"The Trustee may resign the trust hereby created and become and remain wholly discharged from all further duty or responsibility thereunder upon giving sixty days' notice in writing to the Railway Company, or such shorter notice as the Railway Company may accept as sufficient."

Express resignation of the trustee is unnecessary where he abrogates the trust."1

Removal of Trustee by Vote of Bondholders.

"The Trustee may be removed from office at any time by an instrument in writing under the hands of the holders of three-fourths in par value of the bonds hereby secured and then outstanding." A provision largely similar to the above was held controlling, and to prevent the removal of the trustee by legal proceedings where good reasons were not shown for disregarding this voting method."

Appointment of Successor Upon Removal of Trustee. "A majority in number and value of the bond

21. Reynolds v. Kraff (1898), 144 Mo. 433, 46 S. W. 424.

22. Dillaway et al. v. Boston Gaslight Co. et al. (1899), 174 Mass. 80, 54 N. E. 359.

holders may, by an instrument in writing, under their hands, duly acknowledged or proved, and recorded, appoint or select one or more person or persons, or any other corporation, to be a trustee under the mortgage in case of the removal of this Trust Company."

Such a clause is effective for the purposes stated, and upon an action for removal of trustee eliminates any question which might otherwise exist as to a Court's power to appoint a successor.

It was thus characterized in the case cited:23 "This provision secures ample authority to the bondholders to select a trustee to execute and enforce the trust and obligations created by the mortgage if this Trust Company shall be removed by the judgment of this court from its position. And that, certainly, tends to restrict this litigation (action for removal) to the determination whether the trustee shall or shall not be removed from its office under the mortgage."

The selection of a trust company as successor trustee under such a provision was upheld in Farmers Loan and Trust Co. v. Hughes."

Acceptance by Substituted or Successor Trustee.

"Any such new Trustee appointed hereunder, shall execute, acknowledge and deliver to the Trustee last in office and also to the Railway Company an instrument accepting such appointment hereunder, and thereupon such new Trustee without any further act, deed or conveyance, shall become vested with all the estates, properties, rights, powers,

23. Gibson v. American Loan & Trust Co. (1890), 58 Hun. (N. Y.) 443, 449. 24. (1877), 11 Hun. (N. Y.) 130.

trusts, duties and obligations of its predecessor in the trust hereunder, with like effect as if originally named as Trustee hereunder."

Acceptance of a mortgage trust is presumed.25

Conveyances to Substituted or Successor Trustee.

"The parties shall in any such case make and execute upon request whatever deeds, conveyances, transfers, assignments, releases and assurances may be legally necessary and advisable for the more fully vesting in and confirming to such new Trustee, such estate, rights, powers and duties; and the Trustee ceasing to act shall duly assign, transfer and deliver any property and moneys held by such Trustee to the new Trustee so appointed in its place."

Insertion of the above clause is a proper precaution, though under the ordinary provisions for successorship, title to the property conveyed by the trust deed vests in the successor trustees.26

25.

National Bank of Goldsboro v. Hill (1915), 226 Fed. 102.

26. Craft v. Indianapolis D. & W. Ry. Co. (1897), 166 Ill. 580, 46 N. E. 1132.

Report of the Committee on Railroad Bonds and Equipment Trusts to the Board of Governors and Members of the Investment Bankers' Association of America at Their Third Annual Convention Held at Philadelphia, November 12, 1914

INTRODUCTION.

In the report made by your Committee to the Board of Governors at their meeting in Boston in August an outline was given of the work of the Committee up to that date. In view of the fact that a knowledge of the matter presented in this report is essential to an intelligent consideration of the whole subject under discussion, it seems wise to your Committee, even at the risk of repetition to review the work done by the Committee up to that time, and to then bring forward the discussion to the present date by a review of the work done since our last report. The members of the Association will recall that when the Committee on Railroad Bonds and Equipment Trusts was first formed in 1912, the Committee as then constituted took up, by correspondence with the principal Trust Companies in New York, Boston, Chicago, Philadelphia, Cleveland, Baltimore, Pittsburgh, etc., who had acted as Trustees under indentures securing Equipment Trusts, what was the general practice of these Trustees