CHAPTER LVI A FINANCIAL CORPORATION AS EXECUTOR, ADMINISTRATOR, OR TRUSTEE § 468. Introductory In taking up this part of the subject, it is assumed that the reader has read the foregoing chapters and is therefore familiar with the various fiduciary capacities and knows the duties of each. Therefore no attempt is made in this and the following chapters to define the various terms or to describe the various duties. The term "fiduciary" is often employed because it includes all of the differing capacities, such as executor, administrator, trustee, guardian, committee, etc. § 469. Choosing an Executor In former times, when a man was about to make a will or execute a trust, he cast about him to find someone among the members of his family or his friends whom he believed to have the necessary qualifications to administer his estate and distribute it among those named in the will, or to execute the terms of a trust. It is by no means an easy matter to find just the right person, who is also willing to undertake the burden which the testator desires to impose. In our modern civilization this difficulty may easily be obviated. Banks and trust companies are empowered to act in such capacities. The custom of appointing a bank or a trust company is becoming universal, and as time goes on and the science of fiduciary work is more highly developed, the appointment of an individual instead of a bank or a trust company will be unusual. Executors, administrators, trustees, guardians, committees, conservators, curators, agents, and all those who hold other people's property for them, are fiduciaries. Therefore, a fiduciary is one who holds something-property, money, or the right to either-in trust for another. He is a trustee. § 470. Financial Corporations as Trustees Any person who is capable of making a contract—that is, any person twenty-one years of age or upwards and of sound mind-may act as a fiduciary; and in a sense, although it may not be by formal act, we all function as fiduciaries from time to time, as when any one of us invests money for another. In addition to individuals, national banks, trust companies, and, in many states, state banks may act in any or all of the fiduciary capacities; and it is to the work of these institutions in their fiduciary capacities that this and the following chapters will be devoted. § 471. Trust Companies and State Banks as Trustees For many years, or to be more exact, since the early part of the nineteenth century, trust companies have had these fiduciary capacities. In the earliest times, special charters giving trust powers were obtained from the state legislatures. Recently trust powers have been conferred by the various state banking corporation laws, so that at the present time such rights may be obtained in the same manner that any financial corporation obtains its right or license to do business. It is of course necessary that the provisions of the banking corporation law of the particular state be exactly complied with. In the case of state banks, the conferring of fiduciary powers has arisen since the federal law granting national banks such right or power went into effect, and is, therefore, of recent origin. It is only by virtue of the banking law of the state of location and under which the bank is incorporated, that a state bank can be empowered to exercise trust functions. § 472. National Banks as Trustees Originally, only trust companies had fiduciary capacity, but by virtue of the Federal Reserve Act the same power was given to national banks. Section II K of the Federal Reserve Act provides that: The Federal Reserve Board shall be authorized and empowered to grant by special permit to national banks applying therefor, when not in contravention of State or local law, the right to act as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, committee of estates of lunatics, or in any other fiduciary capacity in which State banks, trust companies or other corporations which come into competition with national banks are permitted to act under the laws of the State in which the national bank is located. Whenever the laws of such State authorize or permit the exercise of any or all of the foregoing powers by State banks, trust companies or other corporations, which compete with national banks, the granting to and exercise of such powers by national banks shall not be deemed to be in contravention of State or local law within the meaning of the act. 1 The fiduciary power of trust companies and state banks has not been questioned, but the right of a national bank to maintain a trust department has been seriously questioned in various jurisdictions; and in each instance where the courts have been called upon for a decision, they have decided in favor of the national banks. § 473. Decisions of the Courts In the leading case1 on the question the late Chief Justice White of the Supreme Court of the United States wrote the opinion. The rule was there laid down that, although a certain business may be of a private nature and subject to state First Nat. Bank v. Fellows ex rel. Union Trust Co., 244 U. S. 416. |