(c) (d) Agent. Agent for married women in respect to their separate property. A Trust Company may FIDUCIARY Take, accept, execute any and all such legal trusts, duties, (b) Depository of moneys paid into court whether for (c) Trustee, guardian, receiver, committee of the estate of any lunatic, idiot, person of unsound mind, or habitual drunkard. (d) Receiver, committee of the property or estate of any person in insolvency or bankruptcy proceedings. (e) Executor of, or trustee under the last will and testament, or administrator with or without the will annexed, of the estate of a deceased person. (f) In any other fiduciary capacity. II. Person, persons, municipality, body politic, corporation (foreign or domestic), or authority by will, grant, assignment, transfer, or otherwise and act as (a) Executor or trustee under will or deed. (b) Trustee for married women in respect to their (c) Trustee under marriage settlements. (e) Depository under stipulations between persons en- (f) Depository in escrow of cash, securities, agreements. (g) Depository under lease contracts. (h) Depository under syndicate and re-organization agreements. (i) STOCK AND BOND ISSUES 249 Depository or agent of voting trustees under voting trusts. (j) Trustee under mortgages issued by corporations (foreign or domestic), municipalities, or bodies politic. (k) Trustee under equipment trusts. And according to the terms of, and being accountable to all persons in interest for the faithful discharge of every such trust, duty, power which it may accept, may receive, take, manage, hold, dispose of, sell any property, real or personal, wherever located, and the rents and profits thereof. A Trust Company may SAFE-KEEPING Let out receptacles for the safe deposit of personal property. stocks, securities, or valuables, upon such terms and 175. Registration of stock and bond issues. How is the public to know, when an issue of $5,000,000 of bonds or stocks has been legally authorized, that more than that amount will not be marketed? It increases security and promotes confidence for a responsible third party to register every issue of bonds or stock, as well as every later transfer, to make sure that there is no over issue. A bank or trust company that does this work is known as a "registrar." No security is sold until it has been registered by the registrar and a certification to that effect is made on each separate bond and stock certificate. Every subsequent issue to a new owner is carefully compared with the canceled security to see that there is no excess issue and the new certificate is duly certified. There is no doubt that the marketability of a security is greatly enhanced by this oversight by an outside interest. In fact the New York and some other stock exchanges do not allow securities to be listed and sold unless such an arrangement, ap proved by the committee on stock list, is made. No corporation is allowed to act as registrar of its own stock. It is a mooted question whether the registrar is responsible when, notwithstanding reasonable care, which it must use, excess stock should somehow be issued. Is the registrar liable? Some authorities hold that the courts may rule that the registrar on his own responsibility guarantees the genuineness of each certificate, while others think that he acts as a mere agent. A similar problem exists as to transfer agency. Know All Men by These Presents THAT ter value received, has bargained, sold, assigned and transferred, and by these presente does bargain, sell, assign and transfer unto Stock of Shares of the standing in its name on the books of the said Company, represented by Certificate or Certificates No.. and it does hereby constitute and appoint ——————— its true and lawful Attorney irrevocably for it and in its name and stead, but to its use, to sell, to assign, transfer and oot over, all or any part of the said stock, and for that purpose, to make and execute all necessary acts of assignment and transfer, and one or more persons to substitute with like full power, hereby ratifying and confirming all that said Attorney or the substitute or substitutes of said Attorney shall lawfully do by virtue hereof. Irrevocable power of attorney from a corporation to transfer stock. A power to transfer a registered bond is like it except that "bond" is substituted for "shares of the stock" or "stock." In a power from an individual the last paragraph is different. The U. S. treasury department and many transfer agents require the signatures to be certified by a banker, rather than acknowledged before a notary or witnessed. 176. Safeguarding the transfer of securities. - The holder of a certificate of stock can sell it and assign his rights to another (see 30, 31). The printed form on every TRUSTEE UNDER MORTGAGE 251 certificate to be signed by the seller is not only an assignment, but also a power of attorney authorizing another to transfer the stock on the transfer book of the corporation. The transfer consists (1) in passing on the genuineness of the assigned certificate and the signature to the assignment and power of attorney, (2) in canceling it, and (3) in issuing a new certificate to the purchaser after the ownership of the shares has been signed over on the company's book. A bond is usually transferred by indorsement, but if it is registered as to owner, it must be transferred just like stock. Suppose Lee owns 100 shares of stock in the Western Cereal Co. He wishes to sell 50 shares to Jackson. He assigns 50 shares to Jackson and signs a power of attorney directing such shares to be transferred to Jackson. The transfer clerk of the Cereal Co. cancels the old certificate for 100 shares and issues two new certificates, each for 50 shares to Lee and Jackson, respectively. Just as corporations to inspire confidence and get a responsible agent have employed outsiders to register their securities, so some engage trust companies to be transfer agents. The transfer agent has charge of and countersigns issues and reissues of stock certificates. He gives a receipt for the old certificate while he carefully looks it up, issues the new, and has it registered; then he takes a receipt for the new. A transfer office is maintained in every city where a stock is listed on a stock exchange. If a registered bond or a certificate of stock is lost, the owner should file a stop-transfer order with the corporation or the transfer agent. An indemnity bond (see 41) must be given to obtain a new certificate. 177. Trustee under mortgage. When bonds are issued secured by a mortgage, it is necessary that some party be named as trustee to whom the title to the property may go for the benefit of the bondholders in case default is made in the payment of the principal or interest. In the case of collateral trust bonds the collateral is actually deposited in the hands of the trustee. It is now customary for an individual or corporation to select a bank, or trust company, as trustee, or as co-trustee if state law requires an individual. When one person lends another upon security of mortgage or collateral, he gets the mortgage or collateral; but there are hundreds or thousands of bondholders, and it would be out of the question to issue a mortgage to each bondholder or to divide the collateral. The trustee holds the mortgage or collateral and certifies the terms of the agreement on each bond. It also certifies that each bond is one of the series mentioned and described, and prevents an overissue. Some banks and trust companies will not act unless they know by their own investigation that the security exists. Such a trustee adds immensely to confidence in the bonds. The trustee may also act as agent to pay the principal and interest, and deduct all income taxes. Before either principal or interest is due, the mortgagor remits to the trustee sufficient funds to pay these items. Upon failure to receive the principal or interest, the trustee would at once foreclose and take over the property. If the agreement calls for the retirement of a number of bonds each year, the trustee draws the numbers, advertises their call, and pays them with funds furnished by the borrower. If the mortgage calls for a sinking fund, the trustee sees that it is set aside as promised, takes charge of it, and invests it against the maturity of the bonds. As the bonds, or coupons, are paid they are canceled and delivered to the issuing corporation against proper receipts. 178. Depository of property to be delivered on condition. It is proposed to merge the Kokomo, the Kankakee, and the Keokuk implement companies, giving to each stockholder of the Kokomo Company an equivalent amount of preferred and a 50% bonus of common stock |