of limitation in the several States as a bar to the enforcement of judgments recovered by themselves in their own courts.

3

The only legislation of congress in any degree relating to this subject is found in section 967 of the Revised Statutes of the United States, and in the act of congress August 1, 1888. The former provides as follows: "Sec. 967. Judgments and decrees rendered in a circuit or district court, within any State, shall cease to be liens on real estate, or chattels real, in the same manner and at like periods as judgments and decrees of the courts of such State cease, by law, to be liens thereon." The act of 1888 provides as follows: "That judgments and decrees rendered in a circuit or district court of the United States, within any State, shall be liens on property throughout such State, in the same manner and to the same extent, and under the same conditions only, as if such judgments and decrees had been rendered by a court of general jurisdiction of such State." The plain effect of these statutes is to make judgments recovered by individuals in federal courts subject to the bar of the statute of limitations of the States in which the judgments are recovered. But neither of them contains any language, whatever, showing an intent on the part of congress to bring judgments recovered by the United States in federal courts within the application of State statutes of limitation. Their broad terms, however, would include judgments in favor of the United States, unless they are to be restrained by the rule of the common law that the sovereign is not to be devested of a property right by any statute in which he is not expressly named. This rule has been repeatedly recognized and enforced by the Supreme Court of the United States In the case of United States v. Nashville, etc. R. R. Co., they said: "It is settled beyond doubt or controversy upon the foundation of the great principle of public policy, applicable to all governments alike, which forbids that the public interests should be prejudiced by the negligence of the officers or agents to whose care they are confided; that the United States, asserting rights vested in them as a sovereign government, are not bound by any

325 Stat. 357; 1 Supp. Rev. Stat. 602. 4118 U. S. 120.

statute of limitation, unless congress has clearly manifested its intention that they should be so bound." And in the case of Savings Bank V. United States the same court, by Strong, J., said: Strong, J., said: "It is a familiar principle that the king is not bound by any act of parliament unless he be named therein by special and particular words. The rule

thus settled respecting the British crown is equally applicable to this government, and it has been frequently applied in the different States, and practically in the federal courts. It may be considered settled that so much of the royal prerogatives as belonged to the king in his capacity of pariens patriæ, or universal trustee, enters as much into our political state as it does into the principles of the British constitution."

It

The rule and its exceptions were fully examined by Judge Nott in the case of Jones v. United States. He says that the rule has not been departed from to this day, and that he has been unable to discover any case in the American or English courts which does not fall within one of the four exceptions to the rule which he names as follows: "Acts for the advancement of religion; acts providing for the poor; acts for the prevention of wrong; and such inferior claims as might belong indifferently to the king or to the subject." is obvious that the case of the application of a general statute of limitations to a claim of the United States does not fall within any of these exceptions. The question under consideration by the court was whether a claimant could testify in his own behalf in the court of claims, in view of the act of congress which provides that "in courts of the United States there shall be no exclusion of any witness because he is a party to the issue tried." It was held that the claimant could not testify because the act did not by special and particular words apply to suits by or against the United States. I have been able, after careful search, to find but one case in which the precise question under consideration was presented. It was held in the case of United States v. Spiel that a judgment of a federal court in favor of the United States might be enforced, though barred by the statute of

5 19 Wall. 227.

61 Court of Claim's Rep. 389. 78 Fed. Rep. 143.

limitations of the State in which it was recovered. No authorities were cited and no reference was made by the court to section 967 of the Revised Statutes nor to the act of 1888. In the case of United States v. Houstons it was held that a statute of Kansas limiting the time within which a judgment must be revived against the personal representative of a deceased judgment debtor did not bind the United States. It was expressly held by It was expressly held by the court (p. 210) that remedies for the enforcement of a judgment in favor of the United States could not be cut off or denied by lapse of time or by positive legislative enactment of the State, and neither the act of 1888 nor sec. 967 of the Revised Statutes was referred to. It was said, however, by the court: "While a judgment in favor of the United States rendered in this court would cease to be a lien on property in the State within the same period prescribed by the statute as to such liens in general, it is by reason of positive enactment by congress.'

The "positive enactment," here referred to, is not given, but it is supposed that the court had in mind section 967 of the Revised Stat-❘ utes. That statute does not provide that a judgment in favor of the United States shall cease to be a lien at the same time as other judgments, and there is no other statute which so provides. The language of the court was not only a dictum, the point not being necessarily involved in the decision, but cannot be easily reconciled with the subsequent declaration of the court that remedies for the enforcement of a judgment in favor of the United States in their own courts are not to be cut off or barred by State legislation.

The following decisions, while not directly in point, furnish analogies which support the view that section 967 of the Revised Statutes does not embrace judgments recovered by the United States. The Bankruptcy Act of 1867, providing that a discharge in bankruptcy shall release the bankrupt from all his debts, etc., does not embrace debts due the United States. No general words in a statute devest the government of its rights or remedies.8a The United States, whether named in a State statute of limitations or not,

8 48 Fed. Rep. 207.

Sa United States v. Herron, 20 Wall. 251.

are not bound thereby. A suit by the United States to repeal a patent for public lands improperly issued is not barred by any statute of limitation, nor by laches.10 State statutes of limitation do not apply to the State itself, nor to the United States, unless they are specially designated or the mischiefs to be remedied are of such a nature that they must necessarily be included." The defense of laches cannot be set up in a suit by the United States to redeem land sold under a mortgage. The defense of laches cannot be set up in any case against the government.13 There is no presumption of payment against the United States arising from lapse of time.14

12

In the following cases the United States were held to be bound by statutes in which they were not specially named: Fink v. O'Neil,15 where it was held, under Rev. Stat. U. S. § 916, which gives the plaintiff in federal judgments the same remedies by way of execution as are provided in like cases by the laws of the State, that the State exemption laws applied to executions issued upon judg

ments of a federal court in favor of the United States. Green v. United States,16 where it was held that the act of July 2, 1864, which allowes parties in interest to testify, applies to civil actions to which the United States are parties. United States v. McKnight," in which case it was held that the act of May 19, 1828, giving debtors imprisoned under executions from federal courts the privilege of jail limits under State laws includes cases in which the United States are plaintiffs. It is certainly not easy to reconcile the decision in Fink v. O'Neil, 18 with the rule that the United States are not to be deprived of a right or interest by a statute in which they

9 United States v. Hoar, 2 Mason, 311; United States v. Williams, 5 McLean, 133; United States v. Thompson, 98 U. S. 486.

10 United States v. South. Pac. Ry. Co., 39 Fed. Rep. 132.

11 Gibson v. Chouteau, 13 Wall. 92; People v. Gilbert, 18 Johns. (N. Y.) 228.

12 United States v. Insley, 130 U. S. 263.

13 United States v. Kilpatrick, 9 Wheat. 720; United States v. Van Zandt, 11 Wheat. 184; United States v. Dallas Military Road, 140 U. S. 599.

14 United States v. Williams, 5 McLean, 133. 15 106 U. S. 272.

16 9 Wall. 655. 17 14 Pet. 301.

18 Supra.

hands of a receiver, with a consequent loss on the investment. Held, that the enterprise was speculative and hazardous, and that, although the trustees were given a discretion as to the character of their investments and were not limited to the general investments prescribed by law, the authority in the will did not justify the investment in question, although the trustees acted in good faith in making it.

It seems that, under the authority contained in the will, had the trustees invested in the stock of a railroad, manufacturing, banking, or even business corporation, which by its successful conduct for a long period of time had achieved a standing in commercial circles and acquired the confidence of investors, their conduct would bave been justified, although the investment proved unfortunate.

CULLEN, J.: The question in the case is as to, the liability of the appellants as trustees for an investment of $25,000 in the debenture stock of "The Umbrella Company." The authority given the appellants by the will is: "I hereby give my said executors and trustees herein before named full power to reinvest the proceeds of such sale, or other act as aforesaid, in any security, real or personal, which they may deem for the benefit of my estate and calculated to carry out the intention of this, my last will." The testator himself had been in the umbrella business, and by the sixth clause of his will he directed that his interest in the business be closed on the 1st day of July or the 1st day of January immediately following his decease. The referee acquitted the appellants of any bad faith, but held them liable on the ground that the character of the investment was illegal. This report was confirmed by the surrogate, and the surrogate's decree, unanimously affirmed by the appellate division which, while it held that under the will the trustees were not limited to what might be called ordinary trust investments, was of opinion that the investment was speculative and bazardous, and, therefore, improper. With this view we agree. As there was unanimous affirmance below, unless we are prepared to decide that good faith exonerates the trustees from liability, no matter how speculative, hazardous or unwise the investiment may have been, we must affirm the judgment, and cannot look into the evidence to see how speculative or unreasonable the investment was.

The investment in the case at bar was in the preferred stock of a corporation organized to conduct the manufacture and sale of umbrellas, and formed by the consolidation of several firms at the time engaged in that business. The corporation had no real estate or plant. The preferred or debenture stock was issued for merchandise, fixtures and book accounts of the firms, while the common stock was issued for the supposed good will of those firms. While the money was not paid on an 'original subscription of stock, but the stock was bought from a holder, still it was during the very first days of the existence of the company and before experience had shown that it could achieve any success or stability. After doing business for a short time the corporation

failed and two-thirds of the investment of $25,000 was lost. One of the firms from the consolidation of which the corporation sprang was that of the appellant, Hall, in which firm the testator at the time of his decease was a partner. As pointed out in the opinion delivered by Justice Bartlett in the appellate division, the testator certainly never intended that the money he had directed to be withdrawn from the business should be invested in the same business.

We concede that under the terms of the will the trustees were given a discretion as to the character of the investments they might make, and that they were not limited to the investments required by a court of equity in the absence of any directions from a testator. The trusts of this will are to provide the testator's children with incomes during their lives, and on their deaths the principal is to go to their issue. The very object of the creation of the trust was, therefore, the security of the principal; otherwise the testator might better have given the property outright to his children, who were the primary objects of his bounty. The range of so-called "legal securities" for the investment of trust funds is so narrow in this State that a testator may well be disposed to grant to his executors or trustees greater liberty in placing the funds of the estate. But such a discretion, in the absence of words in the will giving greater authority, should not be held to authorize investment of the fund in new speculative or hazardous ventures. If the trustees had invested in the stock of a railroad, manufacturing, banking, or even business corporation, which, by its successful conduct for a long period of time, had achieved a standing in commercial circles and acquired the confidence of investors, their conduct would have been justified, although the investment proved unfortunate. But the distinction between such an investment and the one before us is very marked. Surely there is a mean between a government bond and the stock of an Alaska gold mine, and the fact that a trustee is not limited to the one does not authorize him to invest in the other.

In our judgment, the authority given to the appellants by this will is quite similar to that vested in trustees in many New England States, where the strict English rule as to the investment of trust securities which prevails in this State does not obtain. In Mattocks v. Moulton, 84 Me. 545, it was held that in the investment of trust funds the trustee must exercise sound discretion, as well as good faith and honest judgment. The court said: "It will be generally conceded that a mere business chance or prospect, however promising, is not a proper place for trust funds. While, of course, all investments, however carefully made, are more or less liable to depreciate and become worthless, experience has shown that certain classes of investments are peculiarly liable to such depreciation and loss. These, of course, would be avoided by every prudent man who is investing his own money with a view to

permanency and security rather than chance of profit. A trustee should, therefore, avoid them, even though he sincerely believes a particular investment of that class to be safe as well as profitable." In Dickinson, appellant, 152 Mass. 184, a trustee was held liable for an investment in Union Pacific railroad stock. It was there said: "Our cases, however, show that trustees in this commonwealth are permitted to invest portions of trust funds in dividend paying stocks and interest bearing bonds of private business corporations, when the corporations have acquired, by reason of the amount of their property, and the prudent management of their affairs, such a reputation that cautious and intelligent persons coinmonly invest their own money in such stocks and bonds as permanent investments."

Several of the equitable life tenants consented to the investment made by the trustees and are estopped from questioning its propriety. The courts below have so held and have authorized the trustees to retain the shares of such life tenants in the income produced by the sum which the appellants have been directed to pay into the fund on account of the loss on the securities. The decree, however, does not go far enough in this respect, for in certain contingencies these life tenants may be entitled to share in the principal of the fund. The decree should be modified so as to provide that in case any beneficiary, who has assented to the investment in the umbrella stock, should become entitled to any part of the principal of the fund paid by the trustees, then the trustees may retain such part, and as so modified affirmed, without costs of this appeal to any party.

O'BRIEN, BARTLETT, HAIGHT and LANDon, JJ., concur; PARKER, Ch. J., and VANN, J., dissent.

Judgment accordingly.

NOTE. Recent Cases on Investments by Trustees. -Where property is devised to a trustee to pay the income to a person for life, with remainder to the children of the life tenant, the court cannot require the trustee to invest part of the corpus of the estate in household furniture and stock for the use of the life tenant, the remainder men not being before the court. Stouffer v. Clagett (Md.), 32 Atl. Rep. 284. A mere fact that the trustee of a fund consisting of certain bonds fails to sell them at the request of the husband of the beneficiary, although they were paying no interest, is not sufficient to charge him with liability for their depreciation in value. Johns v. Herber, 2 App. D. C. 485. That a trustee is not authorized by the terms of a trust to change the investment at discretion will not relieve him from the duty to watch the investment with reasonable care and diligence, and to apply promptly to the court for leave to change it whenever he deems it necessary, to preserve the fund. Johns v. Herbert, 2 App. D. C. 485. The trustee of a minor child cannot convey land of the trust estate to a land company, formed for speculative purposes, and receive as the price stock of the company. Randolph v. East Birmingham Land Co. (Ala.), 16 South. Rep. 126. A testator set apart a reserve fund to be retained by trustees to

guard against losses by shrinkage in the value of his real estate, or other contingencies, and to be invested and reinvested from time to time, until the termina. tion of the trust. After his death, a corporation, hav. ing determined to construct somewhere in St. Louis a large hotel, selected a site opposite to testator's property, which was at the time rapidly depreciating in value, but were unwilling to erect the hotel there unless property owners on that street would sub. scribe a sufficient amount as a bonus. The trustees, doubting their power to donate from the reserve fund to this enterprise, applied to the court for instruc. tions. Held, that such donation, helping to prevent further decrease in values, would be an "investment," within the meaning of the will. Drake v. Crane (Mo. Sup.), 29 S. W. Rep. 990. Where executors are by the will made trustees of a fund, and directed to place it with one of several companies for investment, they will not be liable on default of the company selected if they exercise due care in selecting it. Pinney v. Newton, 66 Conn. 141, 33 Atl. Rep. 591. One entitled to the use of a fund for life, having been appointed trustee, invested the fund in lands, and opened a coal mine. He formed a partnership with another person; but, the venture proving a failure, such partner was compelled to pay the debts of the firm. Held that, the transaction being a perversion of the trust, the reversioners were not liable to the surviving partner for reimbursement of the amount of the firm debts such partner was compelled to pay. Butler v. Butler, 61 Ill. App. 51. Investments in speculative railroad stocks are not within the limit of any correct rule within which equity will require a trustee to keep with reference to the char acter of securities in which he may make temporary investments of unemployed funds. Sherman v. White, 62 Ill. App. 271. Where a will creates a trust fund, and leaves the manner of its investment to the discretion of the trustees, the latter will be personally liable for any failure to exercise sound discretion and good faith. Caspari v. Cutcheon (Mich.), 67 N. W. Rep. 1093. Where one of two trustees has funds of the trust estate in his possession, and, with the con. sent of his co-trustees, invests them in mortgages taken in his own name, such mortgages, as between the trustee making the instrument and the trust estate, are the property of the latter. Roosevelt v. Land & River Imp. Co. (Sup.), 38 N. Y. S. 242, 3 App. Div. 563. Where a trust deed provides that the trustees "will invest the same, and keep the same invested, in their discretion," and pay the income to certain beneficiaries named, the purchase by the trustees of lands, opening a coal mine thereon and mining operations, were a perversion of the trust. Butler v. Butler, 164 Ill. 171, 45 N. E. Rep. 426. testamentary trustee, who was also executor and a residuary legatee, sold property as executor for $3,500, on credit, taking as trustee, a mortgage on other property, and held such mortgages as an investment for the trust fund. He had previously tried to sell the property at that price, but failed. The trustee had no knowledge of the value of the property on which the second mortgage was taken except what the mortgagor told him. He consulted his solicitor as to the investment, but did not know whether the solicitor had ever seen the property. The entire mortgaged property was not worth more than $100 above the incumbrances, and on foreclosure there was a loss of about $1,400. Held, that the trustee was liable for the loss. Gilbert v. Kolb (Md.), 87 Atl. Rep. 423. A testamentary trustee empowered to in

A