of corporations and the qualifications and duties of such as may engage in the business of acting as trustees, executors and administrators. Such an invasion I think the court may declare and may prevent by its order operating upon the offending agency.

13

The state of New Hampshire met the issue in a different and most unique way. After the passage of the federal statute, it passed a law, 18 which in terms prohibited its own trust companies, and any bank or banking company, from thereafter being appointed administrator of an estate, executor under a will, or guardian, or conservator of the person or property of another.

In Woodbury's Appeal,14 its Supreme Court held this act was valid, and said:

"As the Federal Reserve Act was approved on December 23, 1913, authorizing national banks to act as administrators when the state law permitted it, it is claimed that the New Hampshire statute of 1915 could not deprive them of that privilege; in other words, that subsequent state legislation would be ineffective to deprive them of the power of administration if they already possessed it in this state. Assuming, but not deciding, they have had that authority, it is clear that the language of the Reserve Act does not lead to the conclusion that the legislature of this state could not subsequently provide that national banks should not act as administrators, or that the probate courts should not subsequently appoint them to such positions. The power of the state over the probate courts is exclusive, and they have such powers and only such as the legislature gives them. The Act of Congress was not an attempt to invest probate courts with a power of appointment they did not possess before, but it was an authorization to national banks to accept appointments when the probate courts were authorized to make them. As these courts cannot now make such appointments, it necessarily follows that national banks cannot be appointed. They have no vested right to exercise that trust, and can only enjoy the privilege when the appointing power is authorized to appoint them."

The state of Illinois, by its Supreme Court, did not hesitate to hold15 the federal statute unconstitutional, the court saying:

"If Congress had deemed the exercise of trust powers by national banks necessary to the accomplishment of the governmental purposes for which they were created, it would seem such power would have been granted expressly to all national banks, as was the power to exercise certain banking functions granted by Section 5136 of the Federal Statutes.

13 Laws of 1915, chap. 109, sec. 34.
15 People v. Brady, 271 Ill. 100 (1915).

1496 Atl. (N. H.) 299 (1915).

"The right of a national bank to act as trustee, etc., as conferred by the Federal Reserve Act, was made elective with the bank. This feature of the act would preclude the conclusion that Congress deemed it necessary, on any ground, that national banks possess the power to act as trustees, executors, administrators or registrars of stocks and bonds. If it had, it is evident it would not have made the act elective and permissive. National banks without power to act as trustees, etc., have efficiently served the governmental purposes for which they were primarily created, and it not being shown that such added powers are now necessary to the further success of such purposes, and we being of the opinion the powers attempted to be conferred by Congress belong strictly to the states, we think the Act, in so far as it attempted to confer such powers upon national banks, is unconstitutional and void."

While these state views of state power were being expressed, the Michigan case was on its way to final decision by the Supreme Court of the United States. Before we consider that decision it is important that we note in detail what were the general powers which were conferred by the Banking Law of New York 16 on trust companies, and with slight exception, expressly prohibited to be exercised by other than trust companies.

"In addition to the powers conferred by the general and stock corporation laws, every trust company shall, subject to the restrictions and limitations contained in this article, have the following powers:

"I. To act as the fiscal or transfer agent of the United States, of any state, municipality, body politic or corporation; and in such capacity to receive and disburse money, to transfer, register and countersign certificates of stock, bonds or other evidences of indebtedness, and to act as attorney in fact or agent of any person or corporation, foreign or domestic, for any lawful purpose.

"2. To discount and negotiate promissory notes, drafts, bills of exchange and other evidences of debt; buy and sell exchange, coin and bullion; lend money on real or personal securities; and to receive deposits of money, securities or other personal property from any person or corporation upon such terms as the company shall prescribe.

"3. To lease, hold, purchase and convey any and all real property necessary in the transaction of its business, or which the purposes of the corporation may require, or which it shall anywhere acquire in settlement or partial settlement of debts due the corporation by any

16N. Y. Banking Law, sec. 185.

of its debtors, or to secure such debts, or through sales under any judgment, decree or mortgage held by it.

"4. To act as trustee under any mortgage or bonds issued by any municipality, body politic or corporation, foreign or domestic, and accept and execute any other municipal or corporate trust not prohibited by the laws of this state.

"5. To accept trusts from and execute trusts for married women, in respect to their separate property, and to be their agent in the management of such property or to transact any business in relation thereto.

"6. To act under the order or appointment of any court of competent jurisdiction as guardian, receiver or trustee of the estate of any minor, and as depository of any moneys paid into court, whether 1or the benefit of any such minor or other person, corporation or party, and in any other fiduciary capacity.

"To be appointed and to act under the order or appointment of any court of competent jurisdiction as trustee, guardian, receiver or committee of the estate of a lunatic, idiot, person of unsound mind or habitual drunkard, or as receiver or committee of the property or estate of any person in insolvency or bankruptcy proceedings; to be appointed and to accept the appointment of executor or of trustee under the last will and testament, or administrator with or without the will annexed of the estate of any deceased person.

"7. To take, accept and execute any and all such legal trusts, duties and powers in regard to the holding, management and disposition of any estate, real or personal, wherever located, and the rents and profits thereof, or the sale thereof, as may be granted or confided to it by any court of competent jurisdiction, or by any person, corporation, municipality or other authority and it shall be accountable to all parties in interest for the faithful discharge of every such trust, duty or power which it may so accept.

"8. To take, accept and execute any and all such trusts and powers of whatever nature or description as may be conferred upon or entrusted or committed to it by any person or persons, or any body politic, corporation, domestic or foreign, or other authority by grant, assignment, transfer, devise, bequest or otherwise, or which may be entrusted or committed or transferred to it or vested in it by order of any court of competent jurisdiction, or any surrogate, and to receive, take, manage, hold and dispose of according to the terms of such trust or power any property or estate, real or personal, which may be the subject of any such trust or power.

"9. To purchase, invest in and sell stocks, bills of exchange, bonds and mortgages and other securities; and when moneys or

securities for moneys are borrowed or received on deposit, or for investment, the bonds or obligations of the company may be given therefor, but it shall have no right to issue bills to circulate as money.

"10. To accept for payment at a future date, drafts drawn upon it, by its customers and to issue letters of credit authorizing the holder thereof to draw drafts upon it or its correspondents at sight or on time, not exceeding one year.

"II. To receive, upon terms and conditions to be prescribed by the company, upon deposit for safe keeping, bonds, mortgages, jewelry, plate, stocks, securities and valuable papers of any kind, and other personal property, for hire, and to let out receptacles for safe deposit of personal property.

"12. To purchase and hold for the purpose of becoming a member of a federal reserve bank, so much of the capital stock thereof as will qualify it for membership in such reserve bank, pursuant to an act of Congress, approved December twenty-three, nineteen hundred and thirteen, entitled the "Federal Reserve Act"; to become a member of such federal reserve bank, and to have and exercise all powers, not in conflict with the laws of this state, which are conferred upon any such member by the federal reserve act. Such trust company and its directors, officers and stockholders shall continue to be subject, however, to all liabilities and duties imposed upon them by any law of this state and to all the provisions of this chapter relating to trust companies."

The fiduciary powers, however, are limited by Sec. 191, providing: "No trust company shall have any right or power to make any contract, or to accept or execute any trust whatever, which it would not be lawful for any individual to make, accept or execute."

Further provisions withdrew from new trust companies powers employed by previously formed companies, and brought specially chartered trust companies, so far as consistent with their charters, into the same control as those not specially chartered.

"Sec. 186. Additional powers of certain trust companies. Every trust company which at the time this act takes effect lawfully possesses and exercises the powers for hire, to examine titles to real estate, to procure and furnish information in relation thereto, and to guarantee or insure the title to real estate to persons interested, in such real estate or in mortgages thereon, against loss, by reason of defective title or other incumbrances of or upon such real estate, shall continue to possess such power, but no other trust company shall hereafter have or exercise such power."

"Sec. 187. Powers of specially chartered trust companies. Every trust company incorporated by a special law shall possess the powers

of trust companies incorporated under this chapter and shall be subject to such provisions of this chapter as are not inconsistent with the special laws relating to such specially chartered company."

Section 188 of the Banking Law went into great detail as to the appointment of trust companies as executors, guardian, trustee or administrator, receiver, trustee or committee and as depositary of moneys paid into court, and made regulations with reference to bonds, oaths, investments, and interest charges, all of which were intended beyond question, to affect trust companies alone (except possibly depositaries) and added a most important sub-section as follows:

"8. Preference. If dissolved by the legislature or the court, or otherwise, or liquidated by the Superintendent of banks or otherwise, the debts from such corporation as guardian, trustee, executor, administrator, committee or depositary, shall be entitled to priority of payment from the assets of such corporation on an equality with any other priority given by this chapter."

It is to be noted, therefore, that though the banking powers of a trust company were now clearly stated to include the right to discount promissory notes, etc., again there was a prohibition of that power which the New York Court of Appeals had deemed the basic power of a bank, the right to issue bills to circulate as money. This particular privilege of national banks was in terms denied by subdivision 9 of that section. The right, however, had been for years conferred by the New York banking laws on state banks, though, as we have seen, federal taxation made the privilege useless, and in this statute the privilege was omitted.

Trust companies were, therefore, from 1914 on a parity with state banks in authorized banking powers. State banks were, however, denied all of the peculiar fiduciary privileges which appear in the trust company law, and national banks were denied the privilege to exercise fiduciary powers, except as Federal Reserve Banks were specifically authorized to act as fiscal or transfer agents or as attorney in fact or agent, under subdivision 1 of section 185.

I

The position taken by the state of New York was therefore perfectly clear when the Supreme Court of the United States on June 11, 1917, handed down a decision in the Michigan case which promises to be far-reaching in its influence for the future."7

The Supreme Court, Mr. Chief Justice White writing the opinion, found that the Supreme Court of Michigan had decided that the national bank's exercise of the fiduciary privilege was not in contravention of the laws of the state of Michigan, and as to that proposition the decision of the highest court of Michigan on its own state 17First National Bank v. Attorney General, 244 U. S. 416 (1917).