Opinion
No. 4546.
Argued January 3, 1957.
Decided March 4, 1957.
The provision in a trust instrument wherein a qualified corporate fiduciary was named as trustee that investments thereunder shall be restricted to those "legal for trustees in the State of New Hampshire" was construed to restrict investments to those legal for the particular named trustee in this state and where such trustee had established a common trust fund as authorized by statute (RSA ch. 391) and operated such fund pursuant to federal regulations, investments may properly be made therein, and the provisions of RSA 564;18 relating to investments for trustees generally were held inapplicable.
The propriety of an investment is determined by the terms of the statute in force at the time when the investment is made, and not by the statutory or other rules in force at the time of the creation of the trust.
Hence, the fact that common trust funds were not permissible for corporate trustee investments at the time of creation of a particular trust does not prohibit the corporate trustee from making such investments after enactment of a statute (RSA ch. 391) authorizing corporate common trust fund investments and expressly providing for retrospective application as to existing trusts.
The Legislature in authorizing the establishment of common trust funds by corporate trustees and investments therein (RSA ch. 391) may properly extend its application to include investments of trusts already in existence at the time of enactment.
PETITION, for instructions brought by the plaintiff, a national bank qualified to act as a fiduciary in this state and acting sole trustee of the residuary trust established under the will of J. Charles Pelissier, late of Concord, New Hampshire. The defendants are The Most Reverend Matthew F. Brady, Bishop of Manchester, and the Director of Charitable Trusts of the State of New Hampshire. The plaintiff seeks instructions as to whether or not it may lawfully invest all or part of the assets of the Pelissier trust in its Common Trust Fund which is to be administered consistently with a detailed written plan adopted in accordance with the provisions of section 17 of Regulation F of the Federal Reserve Board.
The Pelissier trust provides that the plaintiff trustee shall use the income thereof for the benefit of the pupils of the Sacred Heart Church School in the city of Concord, imposing upon the trustee the obligation of using the greatest care possible to see that the income would accomplish the greatest amount of good among the poor, needy and deserving. It provides that the trustee should invest the assets of the trust "in a manner legal for trustees in the State of New Hampshire."
The plaintiff's Common Trust Fund Plan contains the following important provisions, among others, which may be summarized: (1) The Common Trust Fund is to be administered in conformity with the applicable laws of the United States and of New Hampshire and the regulations of the state Bank Commissioner, and the Board of Governors of the Federal Reserve. System pertaining to collective investment of trust funds of national banks. These laws and regulations govern notwithstanding any specific provision of the plan. (2) "Before permitting any funds of any trust to be invested in a participation in the Common Fund, the Trust Investment Committee shall review the investments comprising the Common Fund, and if it finds that any such investment is one in which funds of such trust might not lawfully be invested at that time, funds of such trust shall not be invested in a participation in the Common Fund." (Quoted from section 2.2 of the Plan). (3) In making investments the plaintiff as trustee of the Common Fund "shall act in good faith and shall be governed by the rule of prudence applicable to trustees in general." (4) The plaintiff as trustee of the Common Fund "shall at all times be governed by the laws of the State of New Hampshire relative to investments in which the trustee of a testamentary trust may properly invest the assets of such trust in the absence of anything to the contrary contained in the will establishing such trust." (5) Except for certain obligations of the United States, the investment of the Common Fund in stocks and bonds of any one corporation shall not exceed ten per cent of the total value of the Common Fund.
Both defendants admitted the allegations of fact contained in the petition which were treated by the parties as an agreed statement of facts upon which the Court (Wescott, J.) reserved and transferred certain questions of law.
Orr Reno and Charles H. Toll, Jr. (Mr. Toll orally), for the plaintiff.
Devine Millimet and James B. Malley (Mr. Malley orally), for the defendant The Most Reverend Matthew F. Brady, Bishop of Manchester.
Ernest R. D'Amours, pro se, for the defendant Director of Charitable Trusts.
The first question as transferred reads as follows: "1. Subject to the limitations contained in said plan for the establishment and maintenance of said common trust fund, may all of the assets of said residuary trust lawfully be invested in interests in said common trust fund by virtue of the provisions of RSA ch. 391 and notwithstanding the provisions of RSA 564:18?" This requires a determination of whether notwithstanding the more general provisions of RSA 564:18 relating to investments by trustees, the Pelissier trust may be invested in the Common Trust Fund by virtue of the Uniform Common Trust Fund Act (RSA ch. 391) which allows a bank qualified to act as fiduciary to establish a common trust fund.
Except for the provisions as to investment in the underlying Pelissier trust, quoted in the above agreed statement of facts, the issues and the factual situation are identical with those involved in Mechanicks Nat. Bank v. D'Amours, decided this day. 100 N.H. 461. In the cited case we decided that the Uniform Common Trust Fund Act (RSA ch. 391) permitted the plaintiff to invest all or any part of the assets of an underlying trust in its Common Trust Fund, notwithstanding the restrictions as to investments applicable to trustees generally appearing in RSA 564:18, where the underlying trust contained no prohibition against investment in common trust funds. We also decided in that case that the plaintiff's Trust Fund Plan was valid and contained no provisions prohibiting investment in its Common Trust Fund of the testamentary trust there involved.
The investment provision of the Pelissier trust that its investments shall be restricted to those "legal for trustees in the State of New Hampshire" does not mean that they must be legal for all types of trustees under all conditions. The quoted phrase, properly interpreted, means that the investments must be those legal for this particular trustee in the State of New Hampshire. The fact that individual trustees are not permitted to invest in common trust funds, in the absence of such authorization in the trust instrument, does not prohibit corporate fiduciaries from exercising that privilege when, as in this case, it is granted by statute. Banks having the power to act as fiduciaries in this state have been granted by the Legislature the privilege of setting up common trust funds and investing the assets of trust funds therein. For the reasons stated in Mechanicks Nat. Bank v. D'Amours, supra, all or any part of the assets of the underlying Pelissier trust may be invested in the plaintiff's Common Trust Fund which has been set up to comply with federal and state law.
The mere fact that at the time the Pelissier trust was established in 1919, common trust funds were not permissible in this state does not prohibit the investment of the assets of the underlying Pelissier trust in a common trust fund today. This is so not only because of the general case law on the subject (III Scott, Trusts (2nd ed. 1956) ss. 227.9 and 227.13 at pp. 1687 and 1697), but also because of the express provisions of RSA 391:8. This statute reads as follows: "APPLICABILITY. This act shall take effect April 17, 1953, and shall apply to fiduciary relationships then in existence or thereafter established." Such retrospective application to investments of existing trusts is generally considered proper. Anno. 35 A.L.R. (2d) 991; see Citizens' Nat. Bank v. Morgan, 94 N.H. 284.
The answers to the questions in Mechanicks Nat. Bank v. D'Amours, supra, are controlling in this case.
Remanded.
All concurred.