trust company to save it harmless as surety of the depositor. The trust company mingled this with its general funds in its deposits with a bank. It was held the depositor was merely a general creditor, because he was unable to identify the fund." And this rule was also held to apply, where a trustee or fiduciary other than the trust company, which was also the surety of the fiduciary, made a deposit with the trust company, and it was mingled with its general funds.52 Had the Pennsylvania statute been framed as is the Missouri statute there would have been another question, that is to say, had the special fund been as well for the protection of those for whom the trust company was surety as for deposits with it in a fiduciary capacity. In none of these cases was the point presented of following trust funds out of the hands of a trust company. The principle is one in election of remedy. If a cestui que trust sues for the conversion of the fund, he waives his suit for the fund itself and vice versa. If a special fund were not set apart, or a preference claim were given out of the general property of a trustee, the cestui que trust would not have any election of remedies, but would he not become bound from the very inception of the appointment of the trustee to abide by the preference the law gives to the nature of his demand? The inference is not conclusive, but it appears to me that it ought to have some weight on the question whether a creditor of a trust company in its purely fiduciary capacity may follow trust funds into other hands, namely, that added to its general responsibility and its special responsibility, there is super-added the 51. Com. ex rel. v. Union Surety & Guaranty Co. (1908), 37 Pa. Super Ct. 179. 52. Estate Solicitors' Loan & Trust Co. (1897), Pa. Super. Ct. 244. frequent requirement that stockholders thereof are bound by a double liability as to all of its debts. 56 Thus I find decisions recognizing and enforcing this double liability in Maryland,5 in Maine,5* in Massachusetts, in Pennsylvania, and in New York," and no doubt many other cases could be cited. Not all of the cases above cited adjudged enforcement, but they show as the statutes do the existence of this kind of liability. At all events, whether a cestui que trust's property is converted by a trust company or not, surrounded as it is with so many safeguards, rarely, if ever, would a case occur where there would be any desire to pursue the fund in other hands, especially if by so doing there would be involved any question of election, whereby one form of action being resorted to, there might arise estoppel against resorting to another. 53. Miners' & Merchants' Bank v. Snyder (1904), 100 Md. 57, 59 Atl. 707, 68 L. R. A. 312, 108 Am. St. Rep. 390, 68 L. R. A. 312. As to the time when such liability begins, see Murphy v. Wheatley (1905), 102 Md. 501, 63 Atl. 62. 54. Maine Trust & Bkg. Co. v. So. Loan & Trust Co. (1899), 92 Me. 444, 43 Atl. 24; Johnson v. Libby (1913) (Me.), 88 Atl. 647. 55. Nichols v. Taunton Safe Deposit & Trust Co. (1909), 203 Mass. 551, 89 N. E. 1035; Coyle v. Taunton Safe Deposit Co. (1911), 207 Mass. 441, 93 N. E. 791. 56. DeHaven v. Pratt (1909), 223 Pa. 633, 72 Atl. 1068. 57. Cheney v. Scharman (1911), 145 N. Y. App. Div. 456, 129 N. Y. Supp. 993; Gause v. Boldt (1907), 188 N. Y. 546, 80 N. E. 566; Mosler Safe Co. v. Guardian Trust Co. (1913), 208 N. Y. 524. CHAPTER VIII Trust Companies as Co-Fiduciaries and as Agents for Individual Fiduciaries § 39. In General. The joining of a trust company as co-trustee, co-executor, or as agent for personal fiduciaries has afforded a happy solution to the problem of management, when trust company experience, responsibility and equipment are desired, together with the direction and judgment of individual relatives, friends or persons having a peculiarly personal knowledge of the family's affairs or long connected with a particular enterprise or business.' The authority of trust companies to act in such capacities cannot be doubted. The difficulty once existing in England to the effect that corporations could not act as joint tenants was obviated by an Act of Parliament, and does not appear to have been raised in America. 1/2 A trust company may be appointed one of several trustees, under a power authorizing the appointment "of a new trustee or new trustees.' 1. A provision in a will appointing a trust as executor and designating an individual to act with it was construed to intend that both act as joint executors. Varble v. Collins' Ex'r (1916), Ky. 181 S. W. 1115. 11⁄2. Joint Tenancy Act, 1899 (62 & 63 Vict. c. 20; Underhill's Law of Trust & Trustees (7th Ed. 1912), p. 395. 2. Re Thompson's Settlement Trusts, Thompson v. Alexander (1905), 1 Ch. 229, cited in Underhill's Law of Trusts & Trustees (7th Ed. 1913), p. 395. It has been suggested that where a company is a co-trustee, and a new individual trustee is to be designated to fill a vacancy, it would be improper to appoint an official of the trust company, as this would destroy the independence of the joint trustees-one of the possible considerations in the establishment of the joint trust. It is submitted, however, that there would be no such objection to an original appointment of the company and an officer by the creator of the trust, for then the idea of independence would be impliedly excluded. The trust company usually performs all the ministerial duties of a joint trust. In so doing it may be the agent of its co-fiduciaries, a function which the law permits. Thus, in a New York case, the Court said: "It is unquestionable that in the performance of their duties as trustees they had a right to appoint an agent to do some portion of their work, and it is equally undoubted that in appointing an agent they were not precluded from appointing one of their own number. On the contrary, it would seem as if every argument which might be urged in favor of the right to appoint an agent generally, would apply with greater force to the appointment of one of their own number." By reason of its facilities the trust company has the better right to take the custody of the deeds and securities belonging to an estate. The law authorizes cofiduciaries to commit such care to one of their number." 3. Allen on "The Law of Corporate Executors and Trustees" (British), citing Lewin (Ed. 1905), p. 808. 4. Purdy v. Lynch (1895), 145 N. Y. 462, 472. Any one of several trustees may receive rents, though all must concur in a conveyance. Lewin on Trusts (12th Ed.) 292; same rule as to dividends on stock, p. 291. 5. Cottam v. Eastern Counties Rail Co., 1 John & H. 243; Lewin on Trusts (1905), pp. 325, 855. § 40. Liability of Joint Trustees. Co-trustees are but one collective trustee, in contemplation of law, and must exercise the duties of their office in their joint capacity. As the law requires them to join in conveyances, receipts and discharges, it is held that the fact that they do so join is not conclusive evidence of their joint liability. "Such joinder may be explained and each trustee will be held liable individually no further than assets which have come into his hands, provided the transaction is a fair one and there is no breach of trust." An English text writer' states that there are three ways in which a trustee may become liable for the default of his co-trustee, and that these are as follows: "I. Where the trustee receives trust money and hands it over to a co-trustee without securing its due application. "II. Where he permits a co-trustee to receive trust money without making due inquiry as to his dealing with it. "III. Where he becomes aware of a breach of trust, either committed or meditated, and abstains from taking the necessary steps to obtain restitution, or to prevent it from being accomplished." The instrument creating the trust may negative the operation of the above rules, to some extent, at least, by the insertion of indemnity clauses. 8 § 41. Liability of Joint Executors and Administrators. It is said that the same rules that apply to the powers and liabilities of co-executors apply to the 6. 28 Am. & Eng. Encl. of Law 1071. 7. Godefroi's Law of Trusts (2nd Ed. 1891) 243. |