the statute forbids a corporation having money on deposit in a bank about to fail from drawing its check against the deposits,

from a director of the bank, who was also president of the corporation and communicated the knowledge to the latter with the intent that it should draw out the money. The language of the statute does not support either of these propositions, and it would be

and a withdrawal effected of so much from the funds and moneys or securities of the Madison Square Bank under the control of the St. Nicholas Bank. The check was pre-on learning that the bank was about to fail, sented at, and passed through, the clearing house. The East River Bridge Company received a credit with the Hanover Bank, and thus the transfer of the $50,000 was completely made from the Madison Square Bank to the defendant. The Madison Square Bank was closed on the morning of the 9th of Aug-judicial legislation, simply, to hold that they ust, or, more properly speaking, was never opened for business after the 8th, and went into insolvency."

There is no dispute about these facts, nor are they open to different inferences. The only question is with respect to the law, or, in other words, whether the transaction was forbidden by the statute. Hence the judgment is reviewable in this court, notwithstanding the statement in the order that the reversal was upon the law and the facts.

are within the intention and purpose of the law. We must not only produce by judicial construction a new law, but a law which could not have been within the intention of the legislature. The statute is in derogation of the common law, and should not be construed so as to include cases not fairly within its terms. We do not mean to say that it is one of those statutes that must receive a very strict construction, but, when given a fair construction, the plaintiffs can The only authority claimed in behalf of claim nothing more. No one can safely asthe plaintiffs to sustain the judgment is § 48 sert that there is any law that requires a of the stock corporation law, which reads as director of an insolvent bank, or a bank follows: "No corporation which shall have about to become insolvent, to conceal the refused to pay any of its notes or other ob- fact from anyone. No one can claim that ligations when due, in lawful money of the there is any law that forbids a director of United States, nor any of its officers or di- such a bank from disclosing the fact to a rectors, shall transfer any of its property to depositor, even though the depositor should any of its officers, directors, or stockholders, be a corporation in which the bank director directly or indirectly, for the payment of any is interested, and of which he is president. debt, or upon any other consideration than So long as he confines himself to the truth the full value of the property paid in cash. with respect to the condition of the bank, he No conveyance, assignment, or transfer of violates no law, and is guilty of no moral any property of any such corporation by it or wrong. Indeed, it is not very difficult to by any officer, director, or stockholder there- conceive of cases where, in the forum of morof, nor any payment made, judgment suf- als, at least, he would be bound to speak. A fered, lien created, or security given by it or bank director, with such knowledge, who by any officer, director, or stockholder when would look on and see his neighbors depositthe corporation is insolvent or its insolvency ing their money where it would be likely to is imminent, with the intent of giving a pref- be lost, without giving to them any hint or erence to any particular creditor over other warning of the danger, might very well be creditors of the corporation, shall be valid. rated as a man whose moral standing was Every person receiving by means of any such not very high. We may go further, and look prohibited act or deed any property of the at the actual transaction in this case. The corporation shall be bound to account there- defendant's president was a director of the for to its creditors or stockholders or other bank. The defendant was dealing with the trustees. No stockholder of any such cor- bank, making deposits of money in large poration shall make any transfer or assign- sums, and had then to its credit the entire ment of his stock therein to any person in sum which the plaintiffs seek to recover. contemplation of its insolvency. Every Assume that the director of the bank and transfer or assignment or other act done in president of the defendant advised the board violation of the foregoing provisions of this of directors of the latter to make no more section shall be void." It will be seen that deposits, as the bank was about to fail; he the money drawn from the failing bank be- would not violate any law, but, on the conlonged to the defendant, and the check drawn trary, would be performing a duty which he against the deposit was the check of the de- owed to the defendant, to save it from loss. fendant. The defendant's president, being Such a suggestion would, no doubt, result in also a director in the failing bank, owed cer- a withdrawal of the moneys already detain duties to the defendant and its share- posited, which is all that the plaintiff's comholders and creditors, as well as to the bank, plain of; but it would be difficult, if not imits shareholders and creditors. It is obvious possible, to show that under such circumthat the judgment of reversal cannot be sus- stances any law was violated, or any wrong tained without holding that the two follow-done. In the present case we must assume ing propositions are law: (1) That the stat- that the defendant's president not only adute quoted forbids a director in a bank, who vised the withdrawal of the deposit, but has knowledge of its insolvency, from com- signed the check for that purpose, and had it municating this knowledge to a depositor, deposited to the defendant's credit in aneven though the depositor happens to be a other bank, for the very purpose of having it corporation in which the director is inter-paid by the bank that was the clearing-house ested, and of which he is president; (2) that agent of the bank on which it was drawn,

and in which he was a director, knowing all | sustained without such a construction, or the time that it was about to fail. What that in substance. the statute forbids is that the director shall The learned court below has, I think, renot, under such circumstances, draw out his cast the statute, and applied it to a state of own money. The case has been decided in facts not fairly within it, and to which it the court below precisely as if such was the was never applied before. The language of fact. Suppose the director of the bank, the statute is not very concise or clear, and knowing all about its condition, concealed it the phraseology is somewhat involved. from his associate officers and directors in When carefully read, however, the things the defendant, and by this course the $50,000 that are prohibited may be stated in very was lost; it might then be difficult to show few words: (1) It prohibits officers and dithat the president of the defendant had dis-rectors of an insolvent corporation, or of one charged the duty imposed upon him by his about to become insolvent, from using their trust to its creditors or shareholders. If the knowledge of its condition, and their domilaw had not placed some injunction of se- nant position, for their individual benefit, in crecy upon him with respect to the real collecting their own claims, either through a condition of the bank, it is very difficult to voluntary payment, or through collusive see how he could be guilty of any legal or and preferential liens, to the prejudice of moral wrong in participating with the other other creditors not so favorably situated; officers and directors of the defendant in (2) it prohibits a preferential general assaving it from a great pecuniary loss. signment by a corporation, though it does not forbid assignments without preferences; (3) it prohibits a transfer of any of the corporate assets to an officer, director, or stockholder upon any other consideration than the payment of the full value of the property in cash. When we attempt to carry the statute beyond these restrictions, we must rely largely upon speculation with respect to some intent on the part of the lawmakers which is not expressed. It is quite clear, I think, that the statute does not forbid any act disclosed by the facts of this case. The trend of recent decisions of this court has not been in the direction of extending this statute to cases that do not come fairly within its terms. It will be quite sufficient now to refer to two of them. In Jefferson County Nat. Bank v. Townley, 159 N. Y. 490, 54 N. E. 74, we held that an officer or director of an insolvent corporation, while forbidden by the statute from en

There is no law that forbids a depositor in a bank, who is not an officer or director, from drawing a check against the deposit whenever the money is needed, or even when it is thought the bank is liable to fail. The act by means of which the money was withdrawn in this case was the corporate act of the defendant, and not the individual act of the president. The money on deposit belonged to the defendant, and it was subject to check. The circumstance that the defendant in its corporate capacity was induced to exercise its right by information of the condition of the bank communicated by the president, who was also a director of the bank, cannot change the case, so long as the right to withdraw the money existed. The defendant cannot be compelled to restore the money simply because it made use of knowledge possessed by one of its own of ficers. In the care and management of its finances, a corporation is entitled to the ben-forcing his claim, as it was in that case, efit of all the knowledge upon that subject could assign it, and the assignee could enthat any of its officers may possess, and to force it in the same way as any other creditheir best judgment. The act by which the tor, and the fact that the assignee was the deposit was transferred from the failing wife of the officer did not change the case, bank to the defendant was not in any proper so long as the assignment was in good faith, sense the act of the bank or any of its officers and not merely colorable. Much of the reaor directors. It was not a transfer prohib- soning in that case applies to this. ited by any law. It is true that one of the V. Andrews, 145 N. Y. 441, 40 N. E. 214, a bank directors participated in it, but not as creditor of an insolvent corporation had a such director or as an individual, but as an large note, not due, and was permitted by the officer of the defendant, acting in its interest. take in its place eleven small ones, payable officers of the company to surrender it and Whatever he did to withdraw the moneys is on demand, for the purpose of enabling him to be imputed to the defendant, and, of to bring suit upon them in a local court. course, is imputed to it by the judgment be-The suits were brought, and judgments relow. But the question is, Did the defendant, covered by default, and the receiver brought in drawing its check against the deposit, suit to set aside the lien; but this court held violate any law or perpetrate any wrong? that there was no violation of the statute. If it did not, then the participation of one of The defendant in this case was neither an the bank directors in the transaction cannot officer, director, nor stockholder of the bank. change the situation. It would, I think, be It was a depositor, merely, and did nothing an unwarranted construction of the statute except withdraw the deposit in order to to hold that a depositor in a bank, who has save itself from loss. The fact that it was withdrawn the deposit on learning that the moved to do this by a director of the bank, bank was about to close, is liable to be sued who happened to be its own president, does for the money, whenever it can be shown not bring the case within the statute. The that he acted upon information given to him statute, in terms, seems to apply only to corby a director of the bank; and yet the judg-porations "which shall have refused to pay ment now under review cannot very well be any of its notes or other obligations when

In French

Statement by Bartlett, J.:

Appeal from an order of the appellate di

due, in lawful money of the United States." | ing away of the principal by the approach It is not claimed that prior to the presenta- of investment bonds towards maturity. Retion of the check for the $50,000 at another versed. bank, and its payment, the bank which the plaintiff's represent had refused to pay any of its notes or obligations. There is much difficulty, without such a finding, in apply-vision of the supreme court in the first juing this statute even to a case where the payment was made to an officer or director, but we prefer to rest our decision upon the larger question already discussed. Neither the bank nor any of its officers or directors made any transfer of the assets to the de fendant with a view to give a preference, or

in violation of the statute.

The judgment appealed from should be reversed, and that entered on the report of the referee affirmed, with costs.

dicial department, entered April 23, 1898, reversing a decree of the surrogate's court of the county of New York, finally judicially settling and allowing the annual accounts of the trustees for Mary Irene Hoyt, under the last will and testament of her father, Jesse Hoyt, deceased. The accounts involved cover the period from the 14th day of August, 1894, to 14th day of August, 1895.

On the 14th day of August, 1882, JesseHoyt, a resident of the city of New York, died possessed of a large estate. He left a

Parker, Ch. J., and Gray and Martin, last will and testament, dated the 26th day J.J., concur.

of June, 1882, the fourth and eleventh subdivisions of which are particularly involved in

Bartlett, Haight, and Vann, JJ., dis- this controversy. "Fourth. It is my will,

sent.

and I hereby direct, that the sum of one million two hundred and fifty thousand dollars shall be appropriated and received from my

Re Final Judicial Settlement of Annual Ac-estate, real and personal, wheresoever situat-
counts of Samuel N. HOYT et al., Respts.,
As Trustees for Mary Irene HOYT, Appt.,
Under the Will of Jesse Hoyt, Deceased.

1.

2.

(160 N. Y. 607.)

ed, or from the proceeds thereof, by such of my, executors hereinafter named as reside or do business in the state of New York, or to whom letters testamentary on this, my will, shall be granted by any surrogate in said state of New York, and as soon as it A premium on bonds paid on in- can or shall be realized or received by such vesting trust funds the income of which, executors and held in trust by them, and the under a will, is to be paid to testator's survivors and survivor of them, and their daughter for life, with remainder to certain successor or successors to the trust, to and nephews and nieces, cannot be charged to the for the use and benefit of my daughter, Mary daughter and the amount thereof deducted from her income, so as to restore the princi- Irene Hoyt, for and during her natural life; pal of the trust fund in order that it may be and in the meantime, during such her life, turned over unimpaired at the termination to invest and reinvest, and keep the same inof the life estate, where testator has express- vested, and to collect and receive the interly declared his intention to provide for his est, dividends, and income therefrom, and daughter in the "most bounteous and liberal from each and every part thereof, and to apmanner as to expenditure," and obviously in-ply to her use, for and during her natural tended to devote to her use the entire income life, in the most bounteous and liberal manner, as to expenditure, and so as to promote her convenience and comfort, and gratify her

of the fund, making the disposition of the principal after her death a secondary consideration.

Failure of a life tenant to chal-reasonable desires, the said interest, divilenge a deduction of interest, on an annual accounting by a trustee, from her income, does not prevent her from raising the question thereafter as to the distribution of moneys then in the hands of the trustee.

dends, and income so to be collected and received, as the same shall be required for her use and benefit. And it is my further will that the said sum of money hereinabove in this article directed to be appropriated and heid in trust for and during the natural life

(Parker, Ch. J., and Gray and Haight, JJ., dis of my daughter, Mary Irene, and for her

sent.)

(November 21, 1899.)

use, as above herein provided, as to the interest, dividends, and income therefrom, or the securities in which the same shall be in

if any, which shall not have been applied to her use during her natural life, shall, on the death of my said daughter, go and be distributed to and among my nephews and nieces, children of my brothers Alfred M. Hoyt, Reuben Hoyt, and James H. Hoyt, who

A PPEAL by Mary Irene Hoyt from an or-vested, and any surplus of income therefrom, der of the Appellate Division of the Supreme Court, First Department, reversing a decree of the New York County Surrogate's Court settling the accounts of the trustees under the will of her deceased father and refusing to permit them to create a sinking fund out of income to provide for the wear-shall be living at the time of the decease of

my said daughter, in equal portions, if all of them shall be living, or if any of them shall have died without leaving issue living at the time of the decease of my said daughter. If any of my said nephews or nieces shall have died, at or before the decease of my said

People ex rel. Cornell University v. Davenport, 117 N. Y. 549, 23 N. E. 664, is an authority on construction directly in point.

The court decided that under the language used the whole of the interest received should be paid by the comptroller, and no part of it should be set apart for the purpose of making good the charge of the comptroller against the income of the fund.

Re New York Life Ins. & T. Co. 24 Misc. 71, 53 N. Y. Supp. 320.

The weight of decisions in the inferior tribunals is clearly in favor of the life tenant. Bergen v. Valentine, 63 How. Pr. 221; Whittemore v. Beekman, 2 Dem. 275; Re Pollock, 3 Redf. 100; Re Hutchinson, N. Y. L.. J. Feb. 29, 1892; New York Life Ins. & T. Co. v. Kane, 17 App. Div. 542, 45 N. Y. Supp. 543; Re New York Life Ins. & T. Co. 24 Misc. 71, 53 N. Y. Supp. 382.

Outside of New York the weight of authority is equally in favor of the life tenant.

daughter, leaving a child or children living at the time of the decease of my said daughter, then the division is to be made in equal portions between those who shall be living and the child or children of any such deceased nephew or niece, such child or children taking the portion of its or their de ceased parent, and in equal portions thereof, if more than one." "Eleventh. I hereby order or direct my said executors hereinabove appointed, and the survivors and survivor of them, to distribute or retain, without a sale, all such stocks or securities as I may have at the time of my decease, which my said executors shall think it expedient to hold, with a view to and in expectation of appreciation, and to distribute or retain any stocks or securities which I may hold at the time of my decease as an investment, which my executors may think it best to retain as a permanent investment, the choicest, and those having longest to run, to be set apart for my wife's use, as hereinabove directed. But my said executors are not to make any new or other investments, excepting only in the first-mortgage bonds and mortgages on unencumbered real estate held in fee simple, or in the public stocks or bonds of the United States, or state stocks or bonds, first-mortgage railroad bonds, and city bonds, in either of which they may make investments in their discretion, having regard to the best interest of my estate. And I hereby vest all the rights and title, power, authority, control, or direction and discretion conferred upon any of my said executors and trustees in the survivors and survivor of them, and in any adminis- So much only of the moneys received antrators and administrator with the will annually on bonds purchased at a premium nexed, to whom letters may be granted, or must be treated as income, as, according to to any trustee or trustees who may be ap- computations, the investment is found to pointed by the competent court on the death produce; the residue belongs to the princiof my said executors hereinabove named, and pal. the survivors and survivor of them, or on any other contingency by which my said executors, and the survivors and survivor of them, shall become incapable of acting or cease to act."

The other facts in the case appear in the opinion.

Messrs. William D. Guthrie and William F. Moore, for appellant:

McLouth v. Hunt, 154 N. Y. 179, 39 L. R. A. 230, 48 N. E. 548, must be deemed controlling unless distinguished on some really substantial ground.

In cases of doubt or ambiguity the law presumes in favor of a child, as against the

claims of collateral relatives.

As between life tenant and remainderman, any increase in value is wholly for the benefit of the remainderman, and any shrinkage or depreciation must, in turn, be borne by him, and not made good at the expense of the life tenant.

Re Gerry, 103 N. Y. 445, 9 N. E. 235. When providing for his only daughter, testator intended that the means bequeathed for her support should not be diminished in order to provide a sinking fund for the benefit of the remaindermen.

Johnson v. Brasington, 156 N. Y. 181, 50 N. E. 859.

Hemenway v. Hemenway, 134 Mass. 446; New England Trust Co. v. Eaton, 140 Mass. 532, 4 N. E. 69; Shaw v. Cordis, 143 Mass. 443, 9 N. E. 794; Furness's Estate, 12 Phila. 130; Hite v. Hite, 93 Ky. 257, 19 L. R. A. 173, 20 S. W. 778.

Mr. William H. Rand, Jr., with Messrs. Alexander T. Mason and Henry R. Hoyt, for respondents:

The actual income derived from a fund invested in securities purchased at a premium is what the fund earns, remaining itself intact, and not the entire interest received annually from the securities.

Farwell v. Tweddle, 10 Abb. N. C. 94; People ex rel. Cornell University v. Davenport, 30 Hun. 177; New York Life Ins. & 7. Co. v. Kane, 17 App. Div. 542, 45 N. Y. Supp. 543; Wright v. White, 136 Mass. 470.

It was the intention of Jesse Hoyt to bequeath over to his nephews and nieces, upon the death of Mary Irene Hoyt, the specific sum of $1,250,000, or its equivalent in securities, and to give his daughter during her life no more than the net income actually earned by that sum.

The usual purpose of a testator in providing for a beneficial interest in a trust estate is that the net income only shall be applicable, and that the corpus or capital of the

trust estate shall remain intact until the trust shall have determined.

Re Albertson, 113 N. Y. 434, 21 N. E. 117; Reynal v. Thebaud, 54 N. Y. S. R. 144, 23 N. Y. Supp. 615; New York Life Ins. & T. Cɔ. v. Kane, 17 App. Div. 542, 45 N. Y. Supp. 543.

The trustees were authorized to establish and maintain the sinking fund, and to make the reservations of interest.

It is the duty of the trustees to keep the corpus of the trust fund intact as far as possible, and for this purpose they have the right to establish and maintain a sinking

Lorillard v. Clyde, 122 N. Y. 41, 25 N. E. 292: Jordan v. Van Epps, 85 N. Y. 427; Smith v. Smith, 79 N. Y. 634; Freeman, Judgm. § 248; Wells, Res Adjudicata, 248-titled to the entire income earned by the trust