PROPERTY, AND INTEREST THAT TRUSTEES MAY BE MADE TO PAY.

§ 438. Duty of trustee to reduce the trust property to possession.

§ 439. Time within which possession should be obtained.

$440. Diligence necessary in acquiring possession.

§ 441. The care necessary in the custody of trust property.

§ 442. In what manner certain property should be kept.

§ 443. Where the property may be deposited.

§§ 444, 445. How money must be deposited in bank.

§ 446. Within what time trustee should wind up testator's establishment.

§ 447. Trustee must not mix trust property with his own.

§ 448. When a trustee is to convert trust property.

§ 449. General rule as to conversion.

$450. When a court presumes an intention that property is to be converted.

§ 451. When the court presumes that the property is to be enjoyed by cestui que trust in specie.

§ 452. Of investment.

§ 453. As to investment in personal securities.

§ 454. As to the employment of trust property in trade, business, or speculation.

§ 455. Rule as to investments in England.

§ 456. Rule in the United States.

§§ 457, 458. Rule as to real securities.

§ 459. Of investments in the different States.

§§ 460, 461. Construction, where the instruments of trust direct how investments may

be made.

§ 462. Within what time investments must be made.

§ 463. Trustees must not mingle their own money in investments.

§ 464. Must not use the trust money in business.

§ 465. Original investments and investments left by the testator.

§ 466. Changing investments.

§ 467. Acquiescence of cestui que trust in improper investments.

§ 468. Interest that trustees must pay upon trust funds for any dereliction of duty.

§ 469. When he is directed to invest in a particular manner.

§ 470. When he improperly changes an investment.

§ 471. When compound interest will be imposed, and when other rules will be applied. § 472. Rule where an accumulation is directed.

§ 438. THE first duty of a trustee, after his appointment and qualification to act, is to secure the possession of the

trust property and to protect it from loss and injury. If the trust property is an equitable interest or estate, he must give notice to the holder of the legal title; and if he cannot have the legal title transferred to himself, he must take such steps that no incumbrances can be put upon it by the settlor or assignor. If the trust fund consists in part of notes, bonds, policies of insurance, and other similar choses in action, notice should be given to the promisors, obligors, or makers of the instruments. This is the general rule in England and in many of the United States. In some States, however, it is held that an assignment of a chose in action is complete in itself when the assignor and assignee have completed the transfer, and that notice to the debtor is not necessary in

1 Jacob v. Lucas, 1 Beav. 436; Wright v. Dorchester, 3 Russ. 49 n.; Timson v. Ramsbottom, 2 Keen, 35; Forster v. Blackstone, 1 Myl. & K. 297; Roofer v. Harrison, 2 K. & J. 86; Loveredge v. Cooper, 3 Russ. 30; Dearle v. Hall, ib. 1; Meux v. Bell, 1 Hare, 73; Stocks v. Dobson, 4 De G., M. & G. 11; Voyle v. Hughes, 2 Sm. & Gif. 18; Ryall v. Rowles, 1 Ves. 348; 1 Atk. 165; Dow v. Dawson, 1 Ves. 331; 3 Lead. Ca. Eq. 612; Jones v. Gibbons, 9 Ves. 410; Thompson v. Spiers, 13 Sim. 469; Waldron v. Sloper, 1 Drew. 193; Ex parte Boulton, 1 De G. & J. 163; Pierce v. Brady, 23 Beav. 64; Martin v. Sedgwick, 9 Beav. 333; Evans v. Bicknell, 6 Ves. 174; Dunster v. Glengall, 3 Ir. Eq. 47; Forster v. Cockerell, 9 Bligh (N. s.), 332; 3 Cl. & Fin. 456; Feltham v. Clark, 1 De G. & Sm. 307; In re Atkinson, 2 De G., M. & G. 140; Mangles v. Dixon, 18 Eng. L. & Eq. 82; Brashear v. West, 7 Pet. 608; Stewart v. Kirkland, 19 Ala. 162; Cummings v. Fullam, 13 Vt. 134; Northampton Bank v. Balliet, 8 Watts & S 311: Bean v. Simpson, 4 Shep. 49; Phillips v. Bank of Lewistown, 6 Harris, 394; Laughlin v. Fairbanks, 8 Mo. 367; Campbell v. Day, 16 Vt. 358; Barney v. Douglass, 19 Vt. 98; Ward v. Morrison, 25 Vt. 593; Loomis v. Loomis, 2 Vt. 201; Adams v. Leavens, 20 Conn. 73; Van Buskirk v. Ins. Co. 14 Conn. 145; Foster v. Mix, 20 Conn. 395; Bishop v. Halcomb, 10 Conn. 444; Woodbridge v. Perkins, 3 Day, 364; Judah v. Judd, 5 Day, 534; Murdock v. Finney, 21 Mo. 138; Cladfield v. Cox, 1 Sneed, 330; Fisher v. Knox, 13 Pa. St. 622; Judson v. Corcoran, 17 How. 614. But see Beavan v. Oxford, 6 De G., M. & G. 507; Kekewich v. Manning, 1 De G., M. & G. 176; Clack v. Holland, 24 L. J. 19; Barr's Trusts, 4 K. & J. 219; Scott r. Hastings, ib. 633; Bridge v. Beadon, L. R. 3 Eq. 664; In re Brown's Trusts, L. R. 5 Eq. 88; Lloyd v. Banks, L. R. 4 Eq. 222; 3 Ch. 488.

order to make the assignment valid as against third persons, or attaching creditors, or subsequent assignees without notice.1 But it seems to be agreed in all the cases, that, if the debtor without notice and in good faith pays the debt to the assignor, it will be a good payment, and discharge him from further liability; but if he should pay after notice he would still be liable to the assignee. Under all circumstances, it is safer to give notice to the debtor, whether the courts of a State hold notice necessary or not. If the assignor receive the money of the debtor after the assignment, he will hold the money in trust for the assignee. These general rules concerning notice do not apply to equities in real estate. Trustees should also insist upon possession of all the notes, bonds, policies, and other obligations for the payment of money being delivered to them; for, if negligent in this respect, and suits and costs arise, they might be made responsible personally.

1 Sharpless v. Welch, 4 Dall. 279; Bholen v. Cleveland, 1 Mason, 174; Dix v. Cobb, 4 Mass. 508; Wood v. Partridge, 11 Mass. 488; Warren v. Copelin, 4 Met. 594; Littlefield v. Smith, 17 Me. 327; Corser v. Craig, 1 Wash. C. C. 24; United States v. Vaughn, 3 Binn. 394; Muir v. Schenk, 3 Hill, 228; Talbot v. Cook, 7 Mon. 438; Maybin v. Kirby, 4 Rich. Eq. 105; Stevens v. Stevens, 1 Ashm. 590; Beckwith v. Union Bank, 5 Seld. 211; Conway v. Cutting, 50 N. H. 408; Garland v. Harrington, 51 N. H. 409.

2 Reed v. Marble, 10 Paige, 509; Mangles v. Dixon, 18 Eng. L. & Eq. 82; 1 Mac. & G. 446, 3 H. L. Ca. 739, and cases before cited; Stocks v. Dobson, 4 De G., M. & G. 11.

Brashear v. West, 7 Pet. 608, and cases before cited; Judson v. Corcoran, 17 How. 614.

Ellis v. Amason, 2 Dev. Eq. 273; Fortesque v. Barnett, 3 Myl. & K. 36.

5 Wilmot v. Pike, 5 Hare, 14; Etty v. Bridges, 2 Y. & Col. 486; Ex parte Boulton, 1 De G. & J. 163; Webster v. Webster, 31 Beav. 393; Stephens v. Venables, 30 Beav. 625; Barr's Trusts, 4 K. & J. 219; Van Rensalaer v. Stafford, Hopk. Ch. 569; 9 Cow. 316; Poillon v. Martin, 1 Sandf. Ch. 569.

Fortesque v. Barnett, 3 Myl. & K. 36; Meux v. Bell, 1 Hare, 82; Evans v. Bicknell, 6 Ves. 174; Knye v. Moore, 1 S. & S. 65; Lloyd v. Banks, L. R. 4 Eq. 222; 3 Ch. 488.

So, if there are debts or securities already due and payable to the trust estate, the trustees must proceed to collect them. If any loss happens to the estate from any delay, they would be responsible, and they may accept payment even before the debts are due.2 Where it is important for the trustees to give notice of an assignment to them, notice to one of several obligors is notice to all: so notice to one of several of a society of underwriters is sufficient; and if the obligors compose a corporation, there must be notice to the directors or trustees of the corporation.3 So, if notice to trustees is necessary in any case, notice to one is sufficient.1

§ 439. There is no fixed time within which executors are to get in the choses in action of the testator. They must use due diligence; and what is due diligence depends upon the existing facts in every case, and a large discretion must necessarily be vested in the executor. If there is property that cannot be kept without great expense, it should be sold forthwith. If the testator's establishment is expensive, it should be broken up within a reasonable time; and, under special circumstances, two months were held to be reasonable." If

1 Caffrey v. Darbey, 6 Ves. 488; McGachen v. Dew, 15 Beav. 84; Tebbs v. Carpenter, 1 Madd. 298; Waring v. Waring, 3 Ir. Eq. 335; Platel v. Craddock, C. P. Coop. 481; Wiles v. Gresham, 2 Drew. 258; Grove v. Price, 26 Beav. 103; Rowley v. Adams, 2 II. L. Ca. 725; Macken v. Hogan, 14 Ir. Eq. 220; Mucklow v. Fuller, Jac. 198; Powell v. Evans, 5 Ves. 839; Lowson v. Copeland, 2 Bro. Ch. 156; Caney v. Bond, 6 Beav. 486; Cross v. Petree, 10 B. Mon. 413; Wolfe v. Washburn, 6 Cow. 261; Waring v. Darnall, 10 G. & J. 127; Hester v. Wilkinson, 6 Humph. 215; Garner v. Moore, 3 Drew. 277; Neff's App. 57 Pa. St. 91.

2 Mills v. Osborne, 7 Sim. 30.

Timson v. Ramsbottom, 2 Keen, 35; Meux v. Bell, 1 Hare, 88; Re Styan, 1 Phill. 155; Smith v. Smith, 2 Cr. & Mee. 31; Duncan v. Chamberlayne, 11 Sim. 123.

4 Greenhill v. Willis, 4 De G., F. & J. 147.

5 Waring v. Darnall, 10 G. & J. 127; Hughes v. Empson, 22 Beav.

Field v. Pecket, 29 Beav. 576.

there are shares or stocks in corporations, the executors must exercise a sound discretion to sell in the most advantageous manner, and at the most advantageous time. In the case of some Crystal Palace shares owned by a testator, a sale within a year was held to be the exercise of a reasonable discretion, although it was claimed that they ought to have been sold within two months. So, where a large part of an estate consisted of Mexican bonds, which the testator directed to be converted" with all convenient speed," it was held that these words added nothing to the implied duty of every executor to convert such property with all reasonable speed; that a conversion in the course of the second year was proper and reasonable; that if executors were bound to sell at once without reference to the circumstances, there would often be a great sacrifice of property, and therefore that executors were bound to exercise a reasonable discretion, according to the circumstances of each case. But generally stock should be sold within the year allowed for the settling of a testator's estate, and a delay beyond this time may render the executors or trustees liable for the loss, although they act in good faith, and although some of the trustees became of age only a short time before the sale. If, however, it is clear that the trustees have a discretion to sell or not according to their judgment, the case will be governed by the intention and not by the general rule.

§ 440. Personal securities change from day to day; and as the death of the testator puts an end to his discretion in

Hughes v. Empson, 22 Beav. 138; Bate v. Hooper, 5 De G., M. & G. 338; Wilkinson v. Duncan, 26 L. J. (N. s.) Ch. 495.

2 Buxton v. Buxton, 1 M. & C. 80; Prendergast v. Lushington, 5 Hare, 171; Hester v. Wilkinson, 6 Humph. 215; Waring v. Darnall, 10 G. & J.

127.

Sculthorpe v. Tiffer, L. R. 13 Eq. 238; Grayburn v. Clarkson, L. R. 3 Ch. 605.

♦ Mackie v. Mackie, 5 Hare, 70; Wrey v. Smith, 14 Sim. 202; Sparling v. Parker, 9 Beav. 524.