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of limitation in the several States as a bar to statute of limitation, unless congress has clearly the enforcement of judgments recovered by manifested its intention that they should be so themselves in their own courts.

bound.” And in the case of Savings Bank The only legislation of congress in any de v. United States the same court, by gree relating to this subject is found in section Strong, J., said: "It is a familiar principle 967 of the Revised Statutes of the United that the king is not bound by any act of parStates, and in the act of congress August 1, liament unless he be named therein by special 1888. The former provides as follows: and particular words.

The rule “Sec. 967. Judgments and decrees rendered thus settled respecting the British crown is in a circuit or district court, within any equally applicable to this government, and it State, shall cease to be liens on real estate, has been frequently applied in the different or chattels real, in the same manner and at States, and practically in the federal courts. like periods as judgments and decrees of the It may be considered settled that so much of courts of such State cease, by law, to be the royal prerogatives as belonged to the liens thereon.” The act of 1888 provides asking in his capacity of pariens patrice, or follows: "That judgments and decrees ren universal trustee, enters as much into our podered in a circuit or district court of the litical state as it does into the principles of United States, within any State, shall be liens the British constitution." on property throughout such State, in the The rule and its exceptions were fully exsame manner and to the same extent, and amined by Judge Nott in the case of Jones under the same conditions only, as if such v. United States. He says that the rule has judgments and decrees had been rendered by not been departed from to this day, and that a court of general jurisdiction of such State.” he has been unable to discover any case in the The plain effect of these statutes is to make American or English courts which does not judgments recovered by individuals in fed fall within one of the four exceptions to the eral courts subject to the bar of the statute rule which he names as follows: "Acts for of limitations of the States in which the the advancement of religion ; acts providing judgments are recovered. But neither of for the poor ; acts for the prevention of wrong; them contains any language, whatever, show and such inferior claims as might belong ining an intent on the part of congress to differently to the king or to the subject.” It bring judgments recovered by the United is obvious that the case of the application of States in federal courts within the application a general statute of limitations to a claim of of State statutes of limitation. Their broad the United States does not fall within any of terms, however, would include judgments in these exceptions. The question under confavor of the United States, unless they are sideration by the court was whether a claim. to be restrained by the rule of the common ant could testify in his own behalf in the law that the sovereign is not to be devested court of claims, in view of the act of congress of a property right by any statute in which wbich provides that "in courts of the United he is not expressly named. This rule has States there shall be no exclusion of any wit. been repeatedly recognized and enforced by ness because he is a party to the issue tried.” the Supreme Court of the United States In It was held that the claimant could not testhe case of United States v. Nashville, etc. R. tify because the act did not by special and R. Co., 4 they said: "It is settled beyond doubt particular words apply to suits by or against or controversy upon the foundation of the the United States. I have been able, after great principle of public policy, applicable careful search, to find but one case in which to all governments alike, which forbids that the precise question under consideration was the public interests should be prejudiced by presented. It was held in the case of United the negligence of the officers or agents to States v. Spiel? that a judgment of a federal whose care they are confided; that the United court in favor of the United States might be States, asserting rights vested in them as a enforced, though barred by the statute of sovereign government, are not bound by any

3 25 Stat. 357; 1 Supp. Rev. Stat. 602. 4 118 U. S. 120.

5 19 Wall. 227.
& 1 Court of Claim's Rep. 389.
78 Fed. Rep. 143.

limitations of tbe State in which it was recov are not bound thereby.' A suit by the ered. No authorities were cited and no ref United States to repeal a patent for public erence was made by the court to section 967 lands improperly issued is not barred by any of the Revised Statutes nor to the act of statute of limitation, nor by laches.10 State 1888. In the case of United States v. Hous statutes of limitation do not apply to the tons it was held that a statute of Kansas lim State itself, nor to the United States, unless iting the time within which a judgment must they are specially designated or the mischiefs be revived against the personal representative to be remedied are of such a nature that they of a deceased judgment debtor did not bind must necessarily be included.11 The defense the United States. It was expressly held by of laches cannot be set up in a suit by the the court (p. 210) that remedies for the en United States to redeem land sold under a forcement of a judgment in favor of the mortgage.12 The defense of laches cannot United States could not be cut off or denied be set up in any case against the governby lapse of time or by positive legislativement.13 There is no presumption of payment enactment of the State, and neither the act against the United States arising from lapse of 1888 nor sec. 967 of the Revised Stat of time. 14 utes was referred to. It was said, however, In the following cases the United States by the court: "While a judgment in favor were held to be bound by statutes in of the United States rendered in this court which they were not specially named : would cease to be a lien on property in the Fink v. O'Neil,15 where it was held, under State within the same period prescribed by Rev. Stat. U. S. $ 916, which gives the the statute as to such liens in general, it is plaintiff in federal judgments the same by reason of positive enactment by congress.” remedies by way of execution as are pro

The positive enactment,” here referred to, vided in like cases by the laws of the is not given, but it is supposed that the court State, that the State exemption laws aphad in mind section 967 of the Revised Stat- plied to executions issued upon judg. utes. That statute does not provide that a ments of a federal court in favor of the judgment in favor of the United States shall United States. Green v. United States, 16 where cease to be a lien at the same time as other it was held that the act of July 2, 1864, which judgments, and there is no other statute allowes parties in interest to testify, applies which so provides. The language of the to civil actions to which the United States court was not only a dictum, the point not are parties. United States v. McKnight,"7 in being necessarily involved in the decision, which case it was held that the act of May 19, but cannot be easily reconciled with the sub 1828, giving debtors imprisoned under exesequent declaration of the court that rem cutions from federal courts the privilege of edies for the enforcement of a judgment in jail limits under State laws includes cases in favor of the United States in their own courts wbich the United States are plaintiffs. It is are not to be cut off or barred by State legis- certainly not easy to reconcile the decision in lation.

Fink v. O'Neil,18 with the rule that the The following decisions, while not directly United States are not to be deprived of a in point, furnish analogies which support right or interest by a statute in which they the view that section 967 of the Revised Statutes does not embrace judgments re

9 United States v. Hoar, 2 Mason, 311; United States

v. Williams, 5 McLean, 133; United States v. Thompcovered by the United States. The Bank

son, 98 U. S. 486. ruptcy Act of 1867, providing that a discharge 10 United States v. South. Pac. Ry. Co., 39 Fed. Rep. in bankruptcy shall release the bankrupt from


11 Gibson v. Chouteau, 13 Wall. 92; People v. Gilall bis debts, etc., does not embrace debts

bert, 18 Jobns. (N. Y.) 228. due the United States. No general words in 12 United States v. Insley, 130 U. S. 263. a statute devest the government of its rights

13 United States v. Kilpatrick, 9 Wheat. 720; United

States v. Van Zandt, 11 Wheat. 184; United States v. or remedies.Sa The United States, whether

Dallas Military Road, 140 U. S. 599. named in a State statute of limitations or not, 14 United States v. Williams, 5 McLean, 133.

15 106 U. S. 272.

16 9 Wall. 655. 8 48 Fed. Rep. 207.

17 14 Pet. 301. 8a United States v. Herron, 20 Wall. 251.

18 Supra.

are not expressly named. There is a plain tent to except the United States from the distinction between that case and the two universality of the law, and fix a class of cases, Green v. United States and United cases wherein they were parties, to which States v. McKnight, upon the authority of the act would not apply, namely, criminal which the decision was chiefly rested. The cases. two statutes in the latter cases merely laid It it was the intent of congress that a judge down rules of procedure in civil actions, and ment of a federal court in favor of the United did not necessarily operate to deprive the States should be barred by State statutes of United States of a right, title, or interest,

right, title, or interest, at limitation, how is it possible to explain the least they did not operate to deprive them of restriction of the operation of section 967 of property itself, as the decision in Fink v. the Revised Statutes and of the act of 1888 to O'Neil substantially does by removing the judgments as liens on real estate. Why property of their debtor beyond their reach. should the judgment be alive as to personalty

So far as the personal property of the judg- and dead as to realty? It is impossible to re. ment debtor of the United States is concerned, / sist the conclusion that the two statutes in it is plain that the life of the judgment is un- question were enacted for the sole purpose of affected by any State statute of limitations, protecting purchasers of real property by for section 967 of the Revised Statutes refers putting the judgments of federal courts upon in terms only to the lien of a judgment on real the same footing as the judgments of the property or chattels real; and the act of 1888 State courts with respect to their liens, in refers only to the "liens of judgments or de order to avoid the insecurity and uncertainty crees on property," an expression which does of titles that would result from conflicting not include personal property, since a mere systems of law upon so vital a subject, and judgment or decree, of itself, does not con that there was no intention on the part of stitute a lien on personal property. Recur-congress to subject the judgments of federal ring now to the language of Mr. Justice courts in favor of the United States to the Gray in United States v. Nashville, etc. Ry. bar of State statutes of limitation. Co.,'' that the United States are not bound

CHAPMAN W. Matpix. by any statute of limitations unless congress

Washington, D. C. has clearly manifested its intention that they should be so bound,” can it be said that con. gress in declaring that the judgments of fed- TRUSTEES—UNAUTHORIZED INVESTMENT OF eral courts shall cease to be liens on real

TRUST FUNDS. property or chattels real at the same period as judgments of the State courts ceased to

In the matter of ALBERT C. HALL and THOMAS

G. RITCH. be liens thereon "clearly manifested its intention” that the State statute of limitations New York Court of Appeals, October 2, 1900. should operate to bar their lien upon the real A testator, whose estate consisted in part of his in. property of the debtor? There is not a word terest in a business for the manufacture and sale of in the statute wbich expressly or impliedly umbrellas, devised and bequeathed property to his

executors in trust for his children for life, the re. refers to the United States, as there was in

mainder to his grandchildren, who were infants. The the act of July 2, 1864, construed in Green will authorized and empowered the executors to sell v. United States, 20 where the court laid

or convey any part of his estate and to reinvest the hold of the word “civil” in the phrase there

proceeds of such sales "in any security, real or per.

sonal, which they may deem for the benefit of my shall be no exclusion of witnesses in civil ac estate and calculated to carry out the intention of this, tions” because of interest, as indicating an my will." The will further directed the trustees to

close out and sell his interest in his umbrella business intent on the part of congress that the act

within six months after his death. The trustees in. should apply to cases in which the govern vested $25,000 of the estate in the preferred stock of ment is a party, for there would have been a corporation organized to conduct the manufacture

and sale of umbrellas, and formed by the consolida. no occasion to have used the words "civil ac

tion of several firms at the time engaged in that busi. tions” in the act if there had not been an in ness. The corporation had no real estate or plant;

the preferred or debenture stock was issued for

merchandise, fixtures and book accounts of the firms. 19 118 U. S. 120.

The enterprise was unsuccessful, and within a short 20 Supra.

time after its incorporation the corporation went into

hands of a receiver, with a consequent loss on the failed and two-thirds of the investment of investment. Held, that the enterprise was speculative $25,000 was lost. One of the firms from the conand hazardous, and that, although the trustees were solidation of which the corporation sprang was given a discretion as to the character of their invest

that of the appellant, Hall, in which firm the tesments and were not limited to the general investments

tator at the time of his decease was a partner. prescribed by law, the authority in the will did not justify the investment in question, although the

As pointed out in the opinion delivered by Justice trustees acted in good faith in making it.

Bartlett in the appellate division, the testator It seems that, under the authority contained in the

certainly never intended that the money he bad will, had the trustees invested in the stock of a rail. directed to be withdrawn from the business road, manufacturing, banking, or even business cor should be invested in the same business. poration, which by its successful conduct for a long We concede that under the terms of the will period of time had achieved a standing in commercial the trustees were given a discretion as to the circles and acquired the confidence of investors, their

character of the investments they might make, conduct would bave been justified, although the in.

and that they were not limited to the investments vestment proved unfortunate.

required by a court of equity in the absence of CULLEN, J.: The question in the case is as to any directions from a testator. The trusts of this the liability of the appellants as trustees for an

will are to provide the testator's children with investment of $25,000 in the debenture stock of

incomes during their lives, and on their deaths "The Umbrella Company.” The authority given the principal is to go to their issue. The very the appellants by the will is: “I hereby give my object of the creation of the trust was, therefore, said executors and trustees hereinbefore named the security of the principal; otherwise the tesfull power to reinvest the proceeds of such sale, tator might better have given the property outor other act as aforesaid, in any security, real or right to his children, who were the primary obpersonal, which they may deem for the benefit of jects of his bounty. The range of so-called my estate and calculated to carry out the inten “legal securities” for the investment of trust tion of this, my last will.” The testator himself

funds is so narrow in this. State that a testator had been in the umbrella business, and by the may well be disposed to grant to his executors or sixth clause of bis will be directed that his in trustees greater liberty in placing the funds of terest in the business be closed on the 1st day of the estate. But such a discretion, in the absence July or the 1st day of January immediately fol of words in the will giving greater authority, lowing his decease. The referee acquitted the should not be held to authorize investment of the appellants of any bad faith, but held them liable fuod in new speculative or hazardous ventures. on the ground that the character of the invest If the trustees bad invested in the stock of a railment was illegal. This report was confirmed by road, manufacturing, banking, or even business the surrogate, and the surrogate's decree, unan

corporation, wbich, by its successful conduct for imously affirmed by the appellate division

a long period of time, had achieved a standing in which, while it held that under the will the trus commercial circles and acquired the contidence tees were not limited to what migbt be called or of investors, their conduct would bave been jusdinary trust investments, was of opinion tbat ihe tified, although the investment proved unforinvestment was speculative and bazardous, and, tupate. But the distinction between such an intherefore, improper. With this view we agree. vestment and the one before us is very marked. As there was upanimous affirmance below, unless Surely there is a mean between a government we are prepared to decide that good faith exon bond and the stock of an Alaska gold mine, and erates the trustees from liability, no matter bow the fact that a trustee is not limited to the one speculative, hazardous or unwise the investment

does not authorize him to invest in the other. may bave been, we must affirm the judgment, and In our judgment, the authority given to the cannot look into the evidence to see how specu appellants by this will is quite similar to that lative or unreasonable the investment was. vested in trustees in many New England States,

The investment in the case at bar was in the where the strict English rule as to the investment preferred stock of a corporation organized to con of trust securities which prevails in this State duct the manufacture and sale of umbrellas, and

does not obtain. In Mattocks v. Moulton, 84 Me. formed by the consolidation of several firms at

545, it was held that in the investment of trust the time engaged in that business. The corpo funds the trustee must exercise sound discretion, ration had no real estate or plant. The preferred

as well as good faith and honest judgment. The or debenture stock was issued for merchandise, court said: “It will be generally conceded that fixtures and book accounts of the firms, while the

a mere business chance or prospect, however common stock was issued for the supposed good promising, is not a proper place for trust funds. will of those firms. While the money was not While, of course, all investments, however carepaid on an original subscription of stock, but the fully made, are more or less liable to depreciate stock was bought from a holder, still it was dur and become worthless, experience has shown ing the very first days of the existence of the that certain classes of investments are peculiarly company and before experience had shown that liable to such depreciation and loss. These, of it could achieve any success or stability. After course, would be avoided by every prudent man doing business for a short time the corporation who is investing his own money with a view to

permanency and security rather than chance of

guard against losses by shrinkage in the value of his profit. A trustee sbould, therefore, avoid them, real estate, or otber contingencies, and to be invested even though he sincerely believes a particular in and reinvested from time to time, until the termina. vestment of that class to be safe as well as profit tion of the trust. After his death, a corporation, hav, able.” In Dickinson, appellant, 152 Mass. 184, a

ing determined to copstruct somewhere in St. Louis trustee was held liable for an investment in

a large hotel, selected a site opposite to testator's Union Pacific railroad stock. It was there said:

property, which was at the time rapidly depreciating

in value, but were unwilling to erect the hotel there "Our cases, however, show that trustees in this

upless property owners on that street would sub. commonwealth are permitted to invest portionsscribe a sufficient amount as a bonus. The trustees, of trust funds in dividend paying stocks and in doubting their power to donate from the reserve fund terest bearing bonds of private business corpora to this enterprise, applied to the court for instruc. tions, when the corporations have acquired, by

tions. Held, that such donation, helping to prevent reason of the amount of their property, and the

further decrea:e in values, would be an "investprudent management of their affairs, such a rep

ment," within the meaning of the will. Drake v. utation that cautious and intelligent persons coin

Crane (Mo. Sup.), 29 S. W. Rep. 990. Where ex.

ecutors are by the will made trustees of a fund, and monly invest their own money in such stocks

directed to place it with one of several companies for and bonds as permanent investments."

investment, they will not be liable on default of the Several of the equitable life tenants consented company selected if they exercise due care in selectto the investment made by the trustees and are ing it. Pinney v. Newton, 66 Conn. 141, 33 Atl. Rep. estopped from questioning its propriety. The 591. One entitled to the use of a fund for life, baving courts below have so held and have authorized been appointed trustee, invested the fund in lands, the trustees to retain the shares of such life ten

and opened a coal mine. He formed a partnership ants in the income produced by the sum which

with another person; but, the venture proving a fail.

ure, such partner was compelled to pay the debts of the appellants have been directed to pay into the

the firm. Held that, the transaction being a perver. fund on account of the loss on the securities.

sion of the trust, the reversioners were not liable to The decree, however, does not go far enough in the surviving partner for reimbursement of the this respect, for in certain contingencies these amount of the firm debts such partner was compelled life tenants may be entitled to share in the prin to pay. Butler v. Butler, 61 Ill. App. 51. Invest. cipal of the fund. The decree should be modified ments in speculative railroad stocks are not within so as to provide that in case any beneficiary, who

the limit of any correct rule within which equity will has assented to the investment in the umbrella

require a trustee to keep with reference to the char. stock, should become entitled to any part of the

acter of securities in which he may make temporary

investments of unemployed funds. Sherman v. principal of the fund paid by the trustees, then

White, 62 Ill. App. 271. Where a will creates a trust the trustees may retain such part, and as so modi

fund, and leaves the manner of its investment to the fied affirmed, without costs of this appeal to any discretion of the trustees, the latter will be personally party.

liable for any failure to exercise sound discretion and O'BRIEN, BARTLETT, HAIGHT and LANDON, good faith. Caspari v. Cutcheon (Mich.), 67 N. W. JJ., concur; PARKER, Ch. J., and VANN, J., Rep. 1093. Where one of two trustees has funds of dissent.

the trust estate in his possession, and, with the con. Judgment accordingly.

sent of bis co-trustees, invests them in mortgages

taken in his own name, such mortgages, as between NOTE.- Recent Cases on Investments by Trustees. the trustee making the instrument and the trust es-Where property is devised to a trustee to pay the tate, are the property of the latter. Roosevelt v. income to a person for life, with remainder to the Land & River Imp. Co. (Sup.), 38 N. Y. S. 242, 3 App. children of the life tenant, the court cannot require Div. 563. Where a trust deed provides that the the trustee to invest part of the corpus of the estate trustees will invest the same, and keep the same in. in household furniture and stock for the use of the vested, in their discretion," and pay the income to life tenant, the not being before the certain beneficiaries named, the purchase by thc court. Stouffer v. Clagett (Md.), 32 Atl. Rep. 284. A trustees of lands, opening a coal mine thereon and mere fact tbat the trustee of a fund consisting of mining operations, were a perversion of the trust. certain bonds fails to sell them at the request Butler v. Butler, 164 III. 171, 45 N. E. Rep. 426. A of the husband of the beneficiary, although they testamentary trustee, who was also executor and a were paying no interest, is not sufficient to charge him residuary legatee, sold property as executor for $3,500, with liability for their depreciation in value. Johns on credit, taking as trustee, a mortgage on other v. Herber, 2 App. D. C. 485. That a trustee is not property, and held such mortgages as an investment authorized by the terms of a trust to change the in for the trust fund. He had previously tried to sell vestment at discretion will not relieve him from the the property at that price, but failed. The trustee duty to watch the investment with reasonable care had no knowledge of the value of the property on - and diligence, and to apply promptly to the court for which the second mortgage was taken except what leave to change it whenever he deems it necessary, to the mortgagor told him. He consulted his solicitor preserve the fund. Johns v. Herbert, 2 App. D. C. as to the investment, but did not know whether the 485. The trustee of a minor child cannot convey land solicitor had ever seen the property. The entire of the trust estate to a land company, formed for mortgaged property was not worth more than $100 speculative purposes, and receive as the price stock above the incumbrances, and on foreclosure there was of the company, Rapdolph v. East Birmingham a loss of about $1,400. Held, that the trustee was Land Co. (Ala.), 16 Svuth. Rep. 126. A testator set liable for the loss. Gilbert v. Kolb (Md.), 87 Atl. apart a reserve fund to be retained by trustees to Rep. 423. A testameutary trustee empowered to in.

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