from a safe-deposit vault or a bank-why the bank should not immediately put the assets of an estate into its vaults.

§ 502. How a Corporate Fiduciary Keeps Informed as to Securities

Many times in the handling of the assets of an estate, especially where there is a trust, it is helpful to be in a position to know what is happening with regard to the corporation whose securities form the assets of the estate. In the case of a bank or a trust company acting in the fiduciary capacity, all this information is gathered through various means, including the daily newspapers and various services such as the Standard Statistics, the Red Book, and others. A careful index is maintained of all the securities held in the trust department of a bank or a trust company, so that ready reference may be had to ascertain whether the bond has been called, or the stock has conversion privileges, or rights to subscribe to stock have been issued; what the dividend rates are; what the status of bonds with respect to income tax is; and all the other innumerable questions that continually arise in handling securities. It would be unfair to expect that any individual, unless he made the handling of an estate his sole business, should have even a small part of this information, and yet every bit of it is information that should be had in order to handle the assets of an estate in the way which will produce the best results for the beneficiaries named in the will. If an individual fiduciary should try to obtain this information, even if he were willing to devote the necessary time to it, he would have to subscribe to the various services to collect this information. This would cost the estate a good deal of money because these services are very expensive. The bank or the trust company subscribes for these services but no charge is made against the estate for that, as in the case of several of the other items mentioned in another section. It is just part of the bank's overhead.

§ 503. The Difficulty of Securing Honest Administration

If you were about to make your will and you had before you the problem of selecting a proper executor or trustee, what would be the qualification that you would consider the most important? Would it not be that of honesty? In other words, would you not demand that your executor or trustee be someone whom you believed to be so thoroughly honest that every cent of the money or property that you left would go to the persons intended by you, so far as it was in the power of your executor to bring it about? It is unfortunately too true that when one deals with individuals, one must encounter the danger due to the frailties of human beings. This is not to say that all human beings are dishonest, but one never knows what individual will fall under a given set of circumstances. "To err is human." For example, it has happened all too frequently that the testator has appointed someone in whom he had the utmost faith, who, however, actually stole the funds of an estate, or used them to his own advancement to the detriment of the estate, or speculated with them in some way and lost money that should have gone to the family of the decedent.

§ 504. Cases in Point

Many pathetic cases of this kind are on record. In a case in point, the executor of an estate was a man named Sirins. Among the assets of the estate were shares of stock in a corporation which just prior to his appointment had increased its capital stock. The estate was therefore entitled to subscribe to a certain portion of the new stock. It happened that there was a decidedly good market for the stock and therefore it was valuable, and the rights could have been sold at an advantage to the estate. Instead of doing this, he purchased in his own name the stock to which the estate was entitled and paid for some of it out of his own pocket and for some of it out of the

funds of the estate. In this case the court held that the executor "had no right to make a profit to himself in any such way; no trustee could be allowed to make a profit out of his trust," and the court compelled him to surrender to the estate the shares he had subscribed for so that the beneficiaries gained whatever advantage there was in subscribing to the stock.*

In another case an absolutely dishonest and fraudulent administrator was appointed by the courts. Of course, the court at the time had no reason to believe the administrator dishonest. The facts were as follows: A certain man died leaving a widow and two infant children. At the time of his death, the testator was in the jewelry business. He had between $25,000 and $30,000 invested and was doing a prosperous business. The widow consented to the appointment of the administrator, who was a brother-in-law, and allowed him to run the business. It was not long before the brother-in-law had appropriated so much of the profits of the business that he was ready to buy it himself and set up his own business. Up to this time the brother-in-law had never been engaged in the jewelry business and in fact knew nothing of it. His previous occupation had been that of a street-car conductor. Due to the activities of a special guardian, appointed by the same surrogate's court that looked out for the interests of the infants, the wrongful acts of the administrator were detected and when a thorough investigation had been made, the court surcharged this particular administrator with the sum of $5,000.5

§ 505. Why a Corporate Fiduciary Cannot Be Dishonest

If you would be absolutely sure that no dishonesty enter into the handling of your estate, you should by all means appoint a bank or a trust company, as in the nature of things it Turnipseed v. Sirins, 32 S. E. Rep. 423.

In re Feierabend, 38 Misc. (N. Y.) 524

cannot be dishonest. Its employees are all under bond. The bank's resources are available for any loss incurred through the dishonesty of its officers or employees. The funds deposited with the state superintendent of banks of the state in which the trust company or the bank has its interests, are also available to make good any loss incurred through dishonesty of the officers or employees. As a matter of record, no losses to beneficiaries of an estate have ever been incurred by reason either of the dishonesty of an employee of a trust company or the failure of a trust company or a bank. It should always be kept in mind that the funds and other assets. which are in the hands of the trust department of a bank are trust funds, and therefore the general creditors of a bank in case of insolvency have no lien whatsoever upon them. As a matter of fact, the assets, such as stocks, bonds, and mortgages, can be returned to the estate in kind at any time that the trust should terminate, or if a new trustee should be appointed, the funds can be turned over to the new trustee. As to the cash which is in the hands of the trustee, while this may be used in the commercial department of the bank, yet it is safeguarded, as has already been pointed out, by the deposit of securities with the superintendent of banks, and in the case of a national bank, by the additional deposit of securities of a market value equal to the cash deposited in the commercial department. The last mentioned securities are deposited with the trust department of the bank, and trust department creditors would have the first lien thereon.

When a bank or a trust company acts as fiduciary, loss to an estate could arise only in case securities purchased in accordance with the law decreased in market value, so that upon distribution less was obtained for the investments than was paid for them. If this possibility exists when a trust company or bank is acting, how much more likely is loss to occur in this very way when an individual is the executor. Always

remember the bank's opportunity for obtaining information as compared with the individual's.

§ 506. Summing Up the Qualifications of a Fiduciary

In conclusion, therefore, one about to make his will should take very great care in the selection of the person who is to administer his estate. He should first be sure that the individual is thoroughly honest; he should know that he is capable and has had business experience; he should be sure that he has sufficient time to spend on the work of administering the estate and that he would give it first, not secondary, attention. The testator should also bear in mind the necessity of choosing someone who would be in a position to safeguard properly the assets of the estate. The executor, in addition, should possess facilities for obtaining information with regard to investments for the estate; he should be competent and willing to maintain full records, so that at the time the accounting is to be rendered the information would be readily at hand. The executor should also be one who would act impartially and fairly, so that if there should be conflicting interests or family jealousy, he would not be swayed in favor of either party. And then, when the testator has found a person with all these qualifications, he must take into consideration the question of economy. If his estate is large, will his executors have to hire special office space and clerks in order to administer the estate?

It would appear that a trust company or a bank is the only possible executor in which all of these qualifications are present. We therefore urge that if the estate is of any size at all, the testator carefully consider the advantages which a bank or a trust company offers over the individual in fiduciary capacities. It is not believed that, if any man owning property would consider this matter in a cold-blooded business way and decide accordingly, there would be any doubt but that he would choose a trust company.