charge the account. The same may be said of insurance premiums, rent, storage charges, and even allowances to designees. Strict account will be kept of all of these items, so that when the person returns, the bank or the trust company can give him full information both for himself and for the purpose of making up his income tax return, which in itself is of great value and assistance to the individual.

9. They will deliver securities which they are holding in safe-keeping to brokers in accordance with whatever instructions they may have received or in accordance with the agreement which prevails between the bank or the trust company as agent and the principal. They will, of course, receive securities for the account of the principal and put them in safe-keeping.

10. They will care for real property and do everything that the principal himself could do, collecting rents, making repairs, making new leases, attending to the payment of taxes or assessments, renewing insurance, paying the premiums, and carrying on negotiations for purchase and sale of real property. From time to time, in accordance with whatever arrangements are made and in accordance with the fees that are paid for the services, the banks or the trust companies make periodical statements-monthly, quarterly, semiannually, or annually. These statements can be used as indicated above not only for the benefit of the individual himself, but also for the purpose of assisting him in making up his income tax returns, both state and federal.

§ 510. Banks and Trust Companies as Fiscal Agents

Besides acting as agent for individuals in the capacities mentioned above and in the manner indicated, a bank or a trust company may act as fiscal agent, that is, it may represent a corporation in the payment of corporate obligations, such as the interest represented by coupons attached to bonds. This

class of work becomes a necessity when a corporation gets out an issue of bonds. Most of the bonds thus issued are known as "coupon bonds," that is to say, the interest payments are evidenced by coupons which are attached to the bonds, and are collectible upon presentation of the coupons at the office of the fiscal agent. The coupons usually fall due semiannually; sometimes, however, they fall due anually. The holder of the bonds detaches the coupon and presents it to the paying agent or fiscal agent of the corporation either personally or through his bank. The issuing corporation appoints the interest periods in the mortgage or instrument creating the bond issue. It provides the paying agent with the total amount of interest falling due at a particular time.

When the coupons are presented to the paying agent, official checks are made out to the person or his agent, such as another bank, presenting the coupons. The coupons are then canceled and held until all of the coupons of that particular date have been paid. Then they are either canceled and placed in the vault or burned, after which an incineration or cremation certificate is issued to the effect that coupons bearing certain numbers have been thus destroyed. The certificate is signed by an officer of the bank and by an officer of the corporation for whom the bank has been acting. The certificate is witnessed by at least one other employee of the bank who has seen the coupons actually destroyed. This service is an extremely important one from the standpoint of a corporation having coupon bonds.

The bank or the trust company has all the machinery to handle such matters, whereas a corporation not in the banking business would have to instal special accounting systems and to train clerks especially for the work, which would make it quite an expensive matter for the corporation, whereas when the bank handles these matters it is only part of its routine work. Instead of acting for one corporation it acts for a great many.

There are coupons coming due throughout the year at frequent intervals, so that at no time is the bank's coupon payment department-the department that acts as fiscal agent-without considerable business. Of course, where a corporation is acting as its own fiscal agent, it would be busy only once or twice a year, depending on how often its coupons became due. Clerks would have to be taken from their regular duties and trained in this work.

The fiscal agent not only pays coupons, but pays maturing bonds as they fall due, or note issues, or any other corporate obligations. It may also pay dividends on stock, in which case it sends the checks to the various persons who are stockholders as of a certain date. This date is set by the board of directors as the day when the books shall be closed. The payment of dividends includes in general the making out of a check for the proper amount of dividend and forwarding it to the individual at the address which appears on the stockholders' ledger or upon a certified list of stockholders.

The fiscal agent work includes the filing of the government ownership certificates which the fiscal agent has received from the owners of the bonds as the coupons were presented from time to time. The filing of these ownership certificates must be done on the 20th of each month following the month in which the payment of the coupons was made, and the return is made on a special form provided by the government. At the end of the year an annual report must be made to the sorting division of the revenue office, which summarizes all of the monthly reports which have been made. The charges for this work are ordinarily 4 per cent on the total amount of money paid on any interest period, or the deposit of the amount of money, without interest, with the fiscal agent thirty days in advance.

Where the fiscal agent is paying dividends, the fees are in accordance with the number of checks that are to be issued and

vary in proportion with the total number; for example, if there are only one thousand checks to be sent out the charge would be proportionately higher than if there were several thousand.

§ 511. Banks and Trust Companies as Depositaries

A depositary is a person or a corporation with whom property (money, securities, or other things of value) is deposited. There is no provision of law designating who may act in this capacity, but in most instances banks and trust companies are selected for this work. The creation of the relationship may be by the actual deposit of the property, or by a letter or special agreement. Of course the duties that devolve upon the depositary vary in accordance with the arrangements made, that is, in accordance with the terms of the agreement, if there is one, or the letter of instruction, if that is the way in which the relationship has been created.

Where the relationship is that of a simple depositary, then of course the bank or the trust company would hold the property as bailee, that is, it would be responsible to the person who owned the property merely for due diligence in the care of the property, but would not be held responsible for its absolute safety. Where a bank or a trust company is acting, however, while the legal obligation is not different from that where an individual is acting, yet, because of its reputation and standing in the community, it would assume absolute responsibility.

§ 512. Depositaries Under Escrow Agreements

Where, however, the bank or the trust company is acting as depositary under an escrow agreement, there may be many and complicated conditions. Holding property under an escrow agreement means in simple language that the property is being held subject to the fulfilment of certain conditions which are set forth in the agreement. A simple example of this would be where a person had contracted to buy a piece of real prop

erty. Of course he would want to have an opportunity of searching the title to ascertain that he was going to get a marketable title as provided in the contract. At the same time the seller might feel that he wanted to be sure that when the purchaser was satisfied as to the title, he, the seller, would get his money. He therefore would insist that the purchase price be deposited with some disinterested person, bank, or trust company, preferably either of the latter two because of their financial responsibility. An agreement of this kind would have to provide that when the bank had been satisfied by reason of a title company's certificate that the title was in accordance with the contract, the money deposited with it be turned over to the seller. In many instances the conditions to be fulfilled are much more complicated, and the bank is called upon from time to time to watch the happening of many events.

It should be the policy of all banks and trust companies to insist that any escrow agreements be very carefully drawn with respect to defining the duties of the depositary. No bank or trust company or other depositary should be called upon to assume any responsibility other than the responsibility to turn over the property held in escrow when the specific conditions have been fulfilled. In order that there be no doubt as to when the conditions have been fulfilled, it should be clearly defined in the agreement what instrument or certificate is to prove to the depositary the fulfilment of the conditions. It should also be clearly stated what shall constitute a default and what is to be done with the property held in escrow if a default should occur.

§ 513. Depositaries Under Voting Trust Agreements

A bank or a trust company may also act as depositary under a voting trust agreement. This is an agreement entered into between the stockholders holding the majority of the outstanding stock of a corporation. It provides for the appointment