In re

to the minor. His receipt is a sufficient discharge to those paying him money or turning over property to him. ducing the minor's estate to possession, he has the usual authority of any trustee.

It is in paying out what he has received, that the guardian must exercise his discretion. If money is to be paid to a minor, the guardian cannot safely pay it to the minor nor to anyone for him, unless he is authorized so to do by the court. If he does so, he may be compelled to pay the amount again when the infant comes of age. A receipt from a minor is of no legal effect.

In any case where the will or other instrument creating the trust directs the method of payment, the trustee may safely follow orders.

In some cases, where the amounts coming to children are small, courts of probate simply direct that they be paid direct to those having the care of the children in order to save the formality and expense of appointing a guardian of the property.1

Where a ward lives with his guardian as a member of his family, there is usually no obligation for board, and on the part of the ward, no claim for any services rendered. In some states, under such circumstances it is held that the guardian has a claim for maintenance.

REVIEW QUESTIONS

1. When does a minor require a guardian? What court appoints? If a guardian were named in a will, would the court have authority? Why is a guardian bonded?

2. If the father were dead, what duty would devolve on the guardian? If the father were living, should the guardian of the child's property pay for support of the child? If the father could not

1 Perry on Trusts, § 624.

give the children proper education, what could be done? If it is intended that property should be used to help a parent bring up children, how should it be arranged? What responsibility has the trustee in regard to expenditures for maintenance and education?

3. When should the principal of a minor's property be used for his maintenance and training? Has a guardian or trustee authority to do this? What is the attitude of courts in this matter? Would it affect the action of the court if several children were interested or if the principal was to go elsewhere?

4. What are the rules as to investments by guardians? Can a guardian change real estate into personalty? Can a guardian sell real estate of his ward at his discretion?

5. What is a guardian's first duty? What caution must he observe in paying out money? What may courts do when amounts involved are small? Where a ward lives with the family of his guardian, is the guardian entitled to charge board? Must he pay his ward for any services rendered?

CHAPTER LIII

TRUSTEES FOR INSTITUTIONS

§ 450. Management of Corporate Bodies

Any business enterprise in the corporate form is managed by a board of directors, who exercise the functions of trustees and in some cases are called "trustees."

Apart from these organizations established and managed primarily for profit, are a vast multitude of institutions and associations peculiar to our modern social organization, usually in some corporate form, in connection with which great properties are handled, immense funds are controlled, and vast sums expended. In all of these institutions boards of trustees have charge of affairs and direct the expenditures of income.

Some of these organizations are public, as are the educational, charitable, penal, and, in some cases, financial institutions controlled by the state and municipal governments. Others are private and include:

1. The many universities, colleges, schools, and institutions of learning and training, and the great foundations, such as those that bear the names of Russell Sage, Carnegie, and Rockefeller.

2. The great multitude of charitable and philanthropic institutions, founded by private means and controlled by independent boards, such as hospitals, homes, and asylums for the orphaned, the crippled, the aged, and the unfortunate.

3. The many clubs, societies, and associations for all manner of social purposes, in all of which property

is held and money is collected and expended by trustees, directors, or managers.

In all of these institutions those who control the property and manage the affairs exercise fiduciary functions, and are held to the duties and responsibilities of trustees.

§ 451. Management by Boards of Trustees

The management and control of corporate property and affairs rests entirely with the board of directors. This same rule extends to all sorts of associate bodies where those making up the membership are too numerous to act collectively. "Charities," taking the term in its broad sense, are managed in this way. Most public institutions are similarly handled. Libraries, lodges, churches, and associations of many kinds, have boards of trustees who manage and govern them.

Such boards can act only in regular or special meetings, notice of which has been duly given, and their action is expressed by actions and resolutions, adopted and recorded according to the usages of parliamentary law. Strictly, it is only in such lawful meetings with a quorum present that a board may act, and even the separate written assent of each member would not bind the corporation or other body represented by the board.

In corporations and in many other organizations, the board is elected annually by the stockholders or members of the organization. In stock corporations the vote is based on the number of shares held. In membership organizations each member has one vote. In public institutions and in many charitable organizations the trustees are appointed by some outside authority. In some charitable organizations, a vacancy is filled by vote of the remaining trustees. This makes what is called a "self-perpetuating" board, and may result in control by a clique of interested individuals.

§ 452. Powers of Members of Board

Usually members of such boards may resign at any time. A peremptory resignation, phrased "I hereby resign," ends the office immediately. A tentative resignation, phrased “I hereby tender my resignation," requires acceptance before it takes effect.

Directors or trustees have no power to suspend or remove a fellow member. It is difficult to remove a director unless some special law gives authority for his removal. The courts will, for sufficient cause, remove a trustee of a charity or public institution. In some states the statutes provide some method of removing trustees or directors who abuse their trust.

In a corporation the directors have full authority to do everything necessary to conduct the corporate business, save as limited by statute, charter, or by-laws. These powers, however, extend only to the purposes for which the corporation was formed. A board of directors could not sell the entire assets, dissolve the corporation, or make a radical change in the business. A director is practically a trustee for the stockholders and must exercise a trustee's care and good faith and may have no interest adverse to the interest of the corporation.1

Trustees of institutions, societies, and organizations of all kinds, are expected to give the care, attention, and diligence that prudent business men give to their own affairs. The characteristics of these various forms of trusteeships will be discussed briefly in the following sections.

§ 453. Trustees of Charities

A charitable trust is held to include trusts for philanthropic purposes and also trusts for educational and religious objects and all trusts for public convenience, use, or benefit. Under this head would come trustees for colleges and universities,

1 Cook on Corporations, § 648.