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J. Carlin, Pierce Powers, John E. Stanton, John B. Fitzpatrick, Lawrence J. Logan, Thomas F. Galvin and Joseph H. O'Neil, their associates and successors, are hereby made a corporation under the name of the Federal Trust Company. SECTION 2. Said corporation shall have authority to establish and maintain a safe deposit and trust company in the City of Boston, with all the powers and privileges and subject to all the rights, duties, liabilities, and restrictions set forth in all general laws which now are or hereafter may be in force relating to such corporations.
SECTION 3. This act shall take effect upon its passage.
House of Representatives, February 14, 1899.
In those States and Territories whose laws make no special provisions for the incorporation of trust companies, and where the system of special acts granting charters does not prevail, such corporations are organized under the general incorporation laws or under the banking laws. The forms for such incorporation vary somewhat in the several States, but the incorporation certificate, which is forwarded to the Secretary of State, usually specifies the names of the corporators, the name of the proposed corporation, its location, its purpose, and powers desired, the amount of its capital and number of shares into which it is divided, and the date of the instrument. The Secretary of State examines the certificate to make sure that it contains nothing inconsistent with the laws of the State, and if he finds that it is all right in this respect, issues his certificate that the articles of incorporation have been filed, and that the company has authority to do business.
TRUST COMPANY LEGISLATION.
URING the past few years there has been an increasing activity among the State and Territorial lawmakers in the passage of laws relating to trust companies. At the meeting of the Trust Company Section of The American Bankers' Association, in 1897, it was stated that only nineteen of the States had general trust company laws.*
In 1908, al ut three of the States and Territories had some sort of general legislation regarding trust companies, though in several instances such legislation is very incomplete. In twenty-nine States and Territories, trust companies are incorporated under and governed by general trust company laws; in eleven others, trust companies are organized under the general incorporation laws, but are governed by general trust company laws. In seven States, trust companies are incorporated by special acts of the Legislatures.
Florida, Nebraska and Nevada give no recognition to trust companies in their legislation. All three have trust companies in operation, however, the number of such corporations reported in June, 1908, being as follows: Florida, 8; Nebraska, 9; Nevada, 5. In these States no distinction is made between trust companies and other corporations, and they are formed under the general incorporation laws, or if they do a banking business, under the banking laws.
In seven States, namely, Connecticut, Delaware, Maryland, New Hampshire, South Carolina, Vermont and Virginia, trust companies are incorporated by special acts of the Legislatures. These States have some general statutes relating to trust companies, placing them under the control of the State authorities, authorizing them to execute certain kinds of trusts and fixing methods of taxation; but in Virginia there is only a little of such legislation. In North Carolina trust companies were incorporated only by special acts until late in the year 1907, and in Rhode Island until 1908, since which time they may be incorporated under the general trust company law. Alabama, Maine and Massachusetts have only in recent years given up the incorporation by special acts for that by general statutes. Maryland formerly had a general law for the incorporation of trust companies, but this was repealed in 1890. The preamble of the act of repeal sets forth that because of the changes in the character of trust companies since 1876 (when the general law was passed), and on account of the incompleteness of the general law, it had been necessary to incorporate trust companies by special acts anyway, and that the latter method of incorporation is a proper one.
Proceedings Trust Company Section, 1897, p. 158.
In Iowa, trust companies are organized under the general laws with trust powers only, or under the banking law if they are to undertake the banking business. Paragraph 1889 of the Code of 1895 gives trust companies limited Savings Bank powers, except companies organized prior to 1886, which seem to be authorized to do both banking and trust business. The laws of the State relating specifically to trust companies are very meagre.
The following thirty-nine States and Territories have more or less complete general trust company laws: Alabama, Arizona, Arkansas, California, Colorado, District of Columbia, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Washington, West Virginia, Wisconsin, Wyoming.
Of the States and Territories in which trust companies are governed by general trust company laws, about two-thirds provide specially for their incorporation, while in the other third the organization is conducted under the general incorporation laws. The minimum number of corporators required varies from 3 to 25, the latter number being required in the District of Columbia, and the former in nine different States. Five is a favorite number, ten States fixing it as the minimum. number required in New York is 13.
NUMBER OF DIRECTORS REQUIRED.
Many of the States stipulate the minimum number of directors that a trust company may have, a few also stipulating the maximum number. In Colorado and Washington, the number required is at least 3; in Montana, from 3 to 25; in Idaho, Maine, New Jersey, New Mexico, South Dakota, Tennessee and Wisconsin, at least 5; in Georgia and Kansas, from 5 to 15; in Missouri, Oklahoma and Texas, from 5 to 25; in Indiana, at least 6; in Michigan, at least 7; in North Dakota, from 9 to 15; in Minnesota, from 9 to 27; in the District of Columbia, from 9 to 30; and in New York, from 13 to 30.
THE AMOUNT OF CAPITAL STOCK.
The amount of capital stock which trust companies are required to have varies considerably in the different States and Territories, and is naturally smallest in States where the towns are apt to be small,—though this is by no means an invariable rule. In about half of the States having legislation on the subject, a definite minimum amount of capital is fixed without regard to the size of the town or city in which the company is located. The other States arrange schedules in which the mini
mum capital required is determined by the size of the place in which the company is situated.*
Thus, South Carolina fixes the minimum capital with which trust companies may be formed anywhere in the State at $25,000; Texas, $50,000; Hawaii, $100,000, half paid; California, Georgia, Kansas, Louisiana, Mississippi, Missouri, Montana, New Jersey, New Mexico, North Dakota, Tennessee and West Virginia, $100,000; Ohio, $100,000 or $125,000, according to business done; Pennsylvania, $125,000; Minnesota, $200,000, and the District of Columbia, $1,000,000. The following States have schedules in which the minimum capital requirements range between the figures shown; Alabama, from $25,000 to $100,000; Arkansas, $50,000 to $100,000; Colorado, $50,000 to $250,000; Idaho, $10,000 to $100,000; Indiana, $25,000 to $100,000; Iowa, $10,000 to $50,000; Kentucky, $15,000 to $200,000; Maine, $25,000 to $150,000; Massachusetts, $100,000 to $200,000; Michigan, $150,000 to $300,000; New York, $100,000 to $500,000; North Carolina, $5,000 to $25,000; Oklahoma, $100,000 to $200,000; Oregon, $10,000 to $50,000; South Dakota, $25,000 to $100,000; Utah, $25,000 to $100,000; Washington, $10,000 to $100,000; Wisconsin, $50,000 to $100,000; Wyoming, $10,000 to $100,000. It thus appears that the smallest minimum capital required is in North Carolina, where, in towns of 1500 or less population, companies may be formed with a capital of $5,000; while the largest minimum is that of the District of Columbia, $1,000,000. It should be added that the minima above given usually apply only to companies which actually undertake a trust business; the minimum often being smaller if the company does only a banking business.
Most of the States do not place any maximum limit to the capital allowed, but a few do. The maximum limit is $1,000,000 in Kansas; $2,000,000 in Georgia, Indiana, Minnesota, and Pennsylvania; $5,000,000 in West Virginia, and $10,000,000 in Missouri, Montana and Texas.
POWERS AND CAPACITIES OF TRUST COMPANIES.
The powers, or capacities in which trust companies may act, are much the same in different States and Territories having general trust company laws, save in the extent to which a regular banking business may be conducted. Such companies possess, of course, the powers generally granted to all corporations. The special powers are usually enumerated in detail; and in those cases where they are not so enumerated there is usually a provision authorizing them to undertake "any lawful trusts" and to conduct all "such business as is usually carried on by such companies."
There is evidence that the trust company laws of the State of New York have been taken as a guide in the construction of trust company laws in many of the other States. This resulted, no doubt, both from the
Details of these schedules, as well as of other matters here mentioned, are given in Chapter V.
fact that New York has long been the financial centre of the country, and because it was early in the field with a general trust company law, such a law having been passed in 1887. The fact that New York's laws have for many years served as guides in many lines of legislation other than financial must also have had its influence.
It will be useful to know in detail the provisions of the New York laws regarding the powers of trust companies, and the sections of the statutes giving these powers are therefore presented in full:
POWERS OF TRUST COMPANIES IN NEW YORK.
(As amended by Chapter 194, Acts of 1908.)
Section 156. Powers of Corporation.-Upon the filing of any such certificate of authorization of a trust company, the persons named therein and their successors shall thereupon and thereby become a corporation, and in addition to the powers conferred by the general corporation law and the stock corporation law, shall have power:
1. To act as the fiscal or transfer agent of any state, municipality, body politic or corporation; and in such capacity to receive and disburse money, to transfer, register and countersign certificates of stock, bonds or other evidences of indebtedness, and to act as agent of any corporation, foreign or domestic, for any lawful purpose.
2. To receive deposits of trust moneys, securities and other personal property from any person or corporation, and to loan money on real or personal
3. To lease, hold, purchase and convey any and all real property necessary in the transaction of its business, or which the purposes of the corporation may require, or which it shall acquire in satisfaction or partial satisfaction of debts. due the corporation, under sales, judgments or mortgages, or in settlement or partial settlement of debts due the corporation by any of its debtors.
4. To act as trustee under any mortgage or bonds issued by any municipality, body politic or corporation, and accept and execute any other municipal or corporate trust not inconsistent with the laws of this state.
5. To accept trusts from and execute trusts for married women, in respect to their separate property, and to be their agent in the management of such property, or to transact any business in relation thereto.
6. To act under the order or appointment of any court of record as guardian, receiver or trustee of the estate of any minor, and as depositary of any moneys paid into court, whether for the benefit of any such minor or other person, corporation or party.
7. To take, accept and execute any and all such legal trusts, duties and powers in regard to the holding, management and disposition of any estate, real or personal, and the rents and profits thereof, or the sale thereof, as may be granted or confided to it by any court of record, or by any person, corporation, municipality or other authority; and it shall be accountable to all parties in interest for the faithful discharge of every such trust, duty or power which it may so accept.
8. To take, accept and execute any and all trusts and powers of whatsoever nature or description as may be conferred upon or intrusted or committed to it by any person or persons, or any body politic, corporation or other authority, by grant, assignment, transfer, devise, bequest or otherwise, or which may be intrusted or committed or transferred to it or vested in it by order of any court of record, or any surrogate, and to receive and take and hold any property or estate, real or personal, which may be the subject of any such trust.
9. To purchase, invest in and sell stocks, bills of exchange, bonds and mortgages and other securities; and when moneys or securities for moneys are borrowed or received on deposit, or for investment, the bonds or obligations of the company may be given therefor, but it shall have no right to issue bills to circulate as money.