give the children proper education, what could be done? If it is intended that property should be used to help a parent bring up children, how should it be arranged? What responsibility has the trustee in regard to expenditures for maintenance and education?

3. When should the principal of a minor's property be used for his maintenance and training? Has a guardian or trustee authority to do this? What is the attitude of courts in this matter? Would it affect the action of the court if several children were interested or if the principal was to go elsewhere?

4. What are the rules as to investments by guardians? Can a guardian change real estate into personalty? Can a guardian sell real estate of his ward at his discretion?

5. What is a guardian's first duty? What caution must he observe in paying out money? What may courts do when amounts involved are small? Where a ward lives with the family of his guardian, is the guardian entitled to charge board? Must he pay his ward for any services rendered?

CHAPTER LIII

TRUSTEES FOR INSTITUTIONS

§ 450. Management of Corporate Bodies

Any business enterprise in the corporate form is managed by a board of directors, who exercise the functions of trustees and in some cases are called "trustees."

Apart from these organizations established and managed primarily for profit, are a vast multitude of institutions and associations peculiar to our modern social organization, usually in some corporate form, in connection with which great properties are handled, immense funds are controlled, and vast sums expended. In all of these institutions boards of trustees have charge of affairs and direct the expenditures of income.

Some of these organizations are public, as are the educational, charitable, penal, and, in some cases, financial institutions controlled by the state and municipal governments. Others are private and include:

1. The many universities, colleges, schools, and institutions of learning and training, and the great foundations, such as those that bear the names of Russell Sage, Carnegie, and Rockefeller.

2. The great multitude of charitable and philanthropic institutions, founded by private means and controlled by independent boards, such as hospitals, homes, and asylums for the orphaned, the crippled, the aged, and the unfortunate.

3. The many clubs, societies, and associations for all manner of social purposes, in all of which property

is held and money is collected and expended by trustees, directors, or managers.

In all of these institutions those who control the property and manage the affairs exercise fiduciary functions, and are held to the duties and responsibilities of trustees.

§ 451. Management by Boards of Trustees

The management and control of corporate property and affairs rests entirely with the board of directors. This same rule extends to all sorts of associate bodies where those making up the membership are too numerous to act collectively. "Charities," taking the term in its broad sense, are managed in this way. Most public institutions are similarly handled. Libraries, lodges, churches, and associations of many kinds, have boards of trustees who manage and govern them.

Such boards can act only in regular or special meetings, notice of which has been duly given, and their action is expressed by actions and resolutions, adopted and recorded according to the usages of parliamentary law. Strictly, it is only in such lawful meetings with a quorum present that a board may act, and even the separate written assent of each member would not bind the corporation or other body represented by the board.

In corporations and in many other organizations, the board is elected annually by the stockholders or members of the organization. In stock corporations the vote is based on the number of shares held. In membership organizations each member has one vote. In public institutions and in many charitable organizations the trustees are appointed by some outside authority. In some charitable organizations, a vacancy is filled by vote of the remaining trustees. This makes what is called a "self-perpetuating" board, and may result in control by a clique of interested individuals.

§ 452. Powers of Members of Board

Usually members of such boards may resign at any time. A peremptory resignation, phrased "I hereby resign," ends the office immediately. A tentative resignation, phrased "I hereby tender my resignation," requires acceptance before it takes effect.

Directors or trustees have no power to suspend or remove a fellow member. It is difficult to remove a director unless some special law gives authority for his removal. The courts will, for sufficient cause, remove a trustee of a charity or public institution. In some states the statutes provide some method of removing trustees or directors who abuse their trust.

In a corporation the directors have full authority to do everything necessary to conduct the corporate business, save as limited by statute, charter, or by-laws. These powers, however, extend only to the purposes for which the corporation was formed. A board of directors could not sell the entire assets, dissolve the corporation, or make a radical change in the business. A director is practically a trustee for the stockholders and must exercise a trustee's care and good faith and may have no interest adverse to the interest of the corporation.1

Trustees of institutions, societies, and organizations of all kinds, are expected to give the care, attention, and diligence that prudent business men give to their own affairs. The characteristics of these various forms of trusteeships will be discussed briefly in the following sections.

§ 453. Trustees of Charities

A charitable trust is held to include trusts for philanthropic purposes and also trusts for educational and religious objects and all trusts for public convenience, use, or benefit. Under this head would come trustees for colleges and universities,

Cook on Corporations, § 648.

churches, missionary societies, organizations such as the Y. M. C. A., the Red Cross, the W. C. T. U., the Child Welfare Association, and many others, including the great charitable foundations established by Carnegie, Rockefeller, and Mrs. Sage.

An indefinite or uncertain trust, or a trust without a beneficiary, if for a public or a charitable purpose will be sustained by the courts in most states, and will not be invalid because no trustee or beneficiary has been named. The same is true if there has been some error in defining who shall be the trustee or beneficiary, and it is possible from the context of the instrument or from certain incidents, to reach any conclusion as to whom the creator of the trust had in mind. As a rule, courts of equity will not allow a charitable gift to fail because there is no trustee, but will appoint a trustee to administer it or will do so themselves. The court will also take action of some sort where a trustee named by the creator of the trust is not in existence at the time the trust is effective, or where the trustee is unable or incapable of taking such office, or dies, is removed, or refuses to fill the office.

§ 454. Duration of a Charitable Trust

A trust of this nature is not within the rule applying to perpetuities, that is, with proper provisions it may continue for a period longer than "a life or lives in being and twentyone years." As shown by the definition given, it is further distinguished from an ordinary trust by the fact that there is no specific beneficiary or beneficiaries named. A trust of this kind is called a "public trust," while the usual or ordinary trust is known as a "private trust."

§ 455. Trustees of Charitable Trusts

The person creating the trust may not only appoint the trustee he desires to carry out his trust, but may also set out