But whether an unpaid trustee is responsible for only gross, or for a less degree of negligence, there are certain rules of liability which admit of no question. There must be the strictest good faith, and there must be strict observance of the restraints established or approved by the courts, and of special conditions or directions whenever they are affixed to the trust. See 1 Perry on Trusts, 2d edition, §§ 420-460. If a trustee passes the bounds set for the exercise of his discretion, no degree of care, diligence or good faith will protect him. See 1 Perry on Trusts, § 460; Ackerman v. Emott, 4 Barb. 626; King v. Talbot, 40 N. Y. 76.

"The available fund and its use. - It is, however, contended on the part of the defendants, that the loan was not subject to the restraints prescribed for investments upon real estate security, inasmuch as the sum loaned was outside the two-thirds of total amount of deposits required to be kept invested, and was part of the available fund. It is argued that the charter provisions for the safety of ordinary investments, did not apply to this part of the resources of the bank. And it appears from the evidence of the forme rsuperintendent of the banking department that such was the construction adopted by him at the time, in similar cases, after, consultation with the attorney-general. By the charter (section 6) it was made the duty of the trustees to keep invested in the specified securities, all sums received by them beyond an available fund of not exceeding one-third of the total amount of deposits,' 'which they may keep to meet the current payments of the corporation, and which may, by them, be kept on deposit on interest, or otherwise, in such available form as the trustees may direct.' And temporary deposits could be made in banks in the city of New York, at rates of interest to be agreed upon. It is claimed that the phrase 'or otherwise' applies to the entire disposition or management of the available fund, and that the discretion of the trustees over it was absolute, provided only that the fund was not so placed as to deprive them of the legal right to recall it in case of need. The loan in question was shaped in harmony with this idea. While the mortgage security and the obligations of the mortgagor provided for a fixed period of credit, they were made collateral to promissory notes payable on demand. But I am unable to accede to this view of the statute, or of its efficiency to shield the trustees. In order to make the available fund readily and certainly available for the current needs of the bank, the trustees were authorized to 'keep' it, instead of investing it. As a safe and convenient mode of keeping, the deposit of it on interest or otherwise' was authorized. And the selection of depositories might be from banks in the city of New York. This seems to me the only construction consistent with the entire section, and with the end in view. And it makes impossible so anomalous a proceeding as the keeping of a fund available for current use in New York, by sending it to Illinois as a loan upon real estate there. At all events, it is not reasonable to suppose that in providing for a fund of that character and having that office, the legislature designed to authorize, by implication, a species of investments, the use of which for investment purposes was by the same charter expressly forbidden. Nor is it reasonable to infer that an act betraying such solicitude for the safety of deposits tacitly consented to the lending on mere personal security, which is a disposition of trust moneys regarded by courts of equity as especially reprehensible. To combine the two qualities of a call loan upon promissory notes, and the security of a mortgage, in which speci

fied periods of credits were reserved, was assuredly not within the true scope of the charter provisions for an available fund."

Payment to trustees for committee work. - The payments made to trustees for services rendered by them as members of examining committees are also complained of. The charter (sec. 3) provides that the trustees "shall not, as such, directly or indirectly, receive any pay or emolument for their services." It is unnecessary to observe that all covert or circuitous methods of realizing compensation for the services of the trustee "as such" fall within the prohibition.

In the present case there is no indication that an impropriety or indirection was intended. The by-laws provided for appointment by the board in each December, of an examining committee of three of its members, and the provision was one of obvious propriety. The duties of the committee, "to make a thorough examination of the books and assets," and report upon them in detail, were onerous as well as important. The compensation awarded to the committees by the board appears to have been as moderate as the most rigid economy could demand. Nevertheless I am compelled to decide that the allowance was forbidden by the charter. By delegation of trust duty to part of their number, the trustees could not alter the character of the duty or service, which remained that of trustee. The policy of the law is unyielding in this respect, and there would seem to be hardly any conceivable service personally rendered by a trustee to the trust estate, for which he is permitted to charge special compensation upon the ground that it is outside the bounds of his duty as trustee. See Morgan v. Hannas, 49 N. Y. 667.

The liability of trustees — how long it lasts. The remaining defense is, that each of the cause of action set forth in the complaint is barred by the statute of limitations; and it is undisputed that neither of the breaches of trust complained of by the plaintiff occurred within the six years immediately preceding the commencement of the action.

The liability would seem to be of that continuous character which, of itself, suspends or delays the operation of the statute in the case of a trustee. Robinson v. Robinson, 5 Lans. 5; Kain v. Bloodgood, 7 Johns. Ch. 90, 11 Am. Dec. 417; Decouche v. Savetier, 3 id. 190, 8 Am. Dec. 478; Hubbell v. Medberry, 53 N. Y. 98. So long as the trustee is in office, his duty to respond for the trust estate is one of continuous obligation, not terminated by past neglect to discharge the duty. It is not, perhaps, until he ceases to be trustee, or openly asserts title in hostility to the trust, or affirmatively refuses to account, that a cause of action can be said to accrue within the meaning of the statute of limitations. And the propriety of such a rule is evident. No lack of diligence can fairly be imputed to the cestui que trust for delay in suing the trustee, when that delay is the natural result of the confidential relation subsisting between them, and of the essential dependence of one upon the good faith of the other. "If mistaken, however, in this view of the subject, it seems to me that the proper limitation is that of ten years, provided by statute for the general cases in which equitable relief is given. The liability of trustees is one over which courts of equity have long exercised unquestioned jurisdiction. And this jurisdiction is by statute law expressly extended, or recognized as extending, to directors and trustees of corporations, who can be compelled to account for their official conduct in the management and disposition of the funds and property, and to pay to the cor

poration or its creditors whatever may have been lost or wasted by any violation of their duties."

It may be well to add that no appeal was taken by the defendants, and that this, and like litigations brought against the trustees of the above-named bank, were settled by their paying to the plaintiff the sum of one hundred and thirteen thousand five hundred dollars.

4. The superintendent of the banking department requested the opinion of the attorney-general, as to whether there is any provision of law justifying the trustees of a savings institution in borrowing money, or pledging its securities. The reply of that officer, filed in the banking department October 8, 1883, is as follows:

The statutes, so far as I have been able to examine them, contain no express authorization, or prohibition, of such a course of procedure on the part of the trustees of a savings institution.

"I think, however, that it would be contrary to the spirit of the act, chapter 409 of the Laws of 1882, as that act describes very specifically as to how the money shall be invested, and provides for keeping an available fund to meet current expenses, and generally is very explicit in all its details as to the management and conduct of an institution of that description. If a savings bank can pledge part of its securities, it could pledge them all, and thus virtually defeat the effect of the statutes, providing for the safe-keeping and investment of the funds of its depositors.

"I am of opinion that such course would be contrary to the policy of the statute and should not be adopted."

5. A bank may deposit part of its available fund in a bank under § 148, and may deposit in same account a temporary deposit under § 149. Even if total exceeds available fund amount authorized by § 148. Chenango Valley Savings Bank v. Dunn, 40 App. Div. 552, 58 N. Y. Supp. 38.

6. It was held, June 5, 1894, that section 5242 of the National Bank Act (quoting Scott v. Armstrong, 146 U. S. 499, 36 L. ed. 1059, 13 Sup. Ct. Rep. 148) was not intended to require that in the distribution of assets of a failed national bank, rights lawfully acquired by a creditor, or superior equities, should be annulled, therefore liens or rights arising by express agreement between the bank and one contracting with it, or implied from the nature of the dealings between the parties, or by operation of law, prior to insolvency, and not in contemplation of it, are not invalidated. It is the voluntary act of the bank "in contemplation of its insolvency, and with the view of then preventing the ratable application of its property, which is avoided by the national law."

Sections 118 and 130, ch. 689, Laws of 1892 (present sections 148, 159), were held contrary to the national banking law; a savings bank having deposits with a national bank when the latter failed, was entitled to a preference in payment from the assets of the insolvent bank, the circulating notes having been provided for, and all other conditions of the Banking Law having been complied with, so as to entitle the claim to be allowed. Elmira Savings Bank v. Davis, 142 N. Y. 593, 25 L. R. A. 546, 37 N. E. 646, aff'g 73 Hun, 359, 26 N. Y. Supp. 200; but reversed in 161 U. S. 290, 40 L. ed. 703, 16 Sup. Ct. Rep. 502. See note to $159.

§ 149. Temporary deposits. Every such corporation may also deposit temporarily in the banks or trust companies specified in section one hundred and forty-eight the excess of current daily receipts over the payments, until such time as the same can be judiciously invested in the securities required by this article. Whenever it shall appear to the superintendent of banks that the trustees of any such corporation are violating the spirit and intent of this provision by keeping permanently uninvested all or an undue proportion of the moneys received by them, he shall report the facts to the attorneygeneral, who shall proceed against such corporation in the manner provided in section one hundred twenty-seven of chapter six hundred eighty-nine of the laws of eighteen hundred ninety-two.

(Former section 119; R. S., 1569; L. 1882, ch. 409, § 262.)

1. In reply to the question of the author, "Is it proper for a savings bank to deposit money with a bank of deposit or trust company upon the conditions that a certain number of days' notice of the intention to withdraw it shall be given to the depositary before it can be drawn?" the attorney-general, in an opinion filed in the banking department, July 13, 1886, ruled as follows:

"It is made the duty of savings banks to invest money deposited with them as soon as practicable in the designated class of securities. They may, however, keep available funds on hand to an amount not exceeding ten per cent. of the deposits for the purpose of current expenses and payments in excess of deposits; and they may also deposit temporarily in banks and trust companies the excess of the Banking Law having been complied with, so as to entitle the claim to be "It appears to me that the general intention of the law could easily be defeated by allowing the trustees to deposit the funds of the corporation with banks or trust companies upon an agreement that they should not be withdrawn for a certain specified time. If such an agreement could be made for one day, it could be made for one year, and would, to all intents and purposes, if not in name, be a loan. It would not be a temporary deposit, but would put the funds so deposited out of the immediate control of the trustees, and might materially interfere with them in their duty of investing the moneys in the authorized securities as soon as practicable.

"It would be impracticable to so deposit the founds allowed to be kept in hand for current expenses, as such funds deposited under such an arrangement would not be available for the very purposes for which they are authorized to be kept uninvested.

"I do not think, therefore, that the general policy of the law will permit the trustees of savings banks to deposit the funds of the institution with banks and trust companies under an arrangement by which said trustees are bound not to withdraw the money so deposited within any agreed length of time."

§ 150. Personal security prohibited; loans on bond and mortgage. The trustees of any savings bank shall not loan the moneys deposited with them or any part thereof, upon notes, bills of exchange, drafts

or any other personal securities whatever. In all cases of loans upon real property, a sufficient bond secured by a mortgage thereon shall be required of the borrower, and all expenses of searches, examinations and certificates of title, and of drawing, perfecting and recording papers, shall be paid by the borrower.

(Former section 120; L. 1898, ch. 556.)

8 151. Mortgaged property to be insured. Whenever buildings are included in the valuation of any real property upon which a loan shall be made by any such corporation, they shall be insured by the mortgagor in such company or companies as the directors shall direct, and the policy of insurance shall be duly assigned, or the loss made payable as its interest may appear, to such corporation; and any such corporation may renew such policy of insurance in the same or any other company or companies as they may elect, from year to ear, or for a longer or shorter term, in case the mortgagor shall neglect to do so, and may charge the amount paid to the mortgagor. All the necessary charges and expenses paid by such corporation for such renewal or renewals shall be paid by the mortgagor to the corporation, and shall be a lien upon the property mortgaged, recoverable with interest from the time of payment as part of the moneys secured to be paid by the mortgage.

(Former section 121; R. S., 1569; L. 1882, ch. 409, § 265.)

As to application of this section, see Heal v. Richmond Co. Savings Bank, 127 App. Div. 428.

§ 152. Restrictions on methods of doing business. No savings banks shall directly or indirectly deal or trade in real property in any other case or for any other purpose than is authorized by this article, or deal or trade in any goods, wares, merchandise or commodities whatever, except as authorized by this article, and except such personal property as may be necessary in the transaction of its business; nor shall any savings bank or any officer thereof in his regular attendance upon the business of the bank, in any manner buy or sell exchange, or gold or silver, or collect or protest promissory notes or time bills of exchange; but savings banks may sell gold or silver received in payment of interest or principal of obligations owned by them, or from depositors in the regular course of business,