First Wisconsin Trust Co. v. Pereles

48 N.W.2d 601, 259 Wis. 263, 1951 Wisc. LEXIS 361
CourtWisconsin Supreme Court
DecidedJune 15, 1951
StatusPublished
Cited by14 cases

This text of 48 N.W.2d 601 (First Wisconsin Trust Co. v. Pereles) is published on Counsel Stack Legal Research, covering Wisconsin Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
First Wisconsin Trust Co. v. Pereles, 48 N.W.2d 601, 259 Wis. 263, 1951 Wisc. LEXIS 361 (Wis. 1951).

Opinions

Martin, J.

Arthur W. Yates died September 25, 1930, leaving a will dated October 4, 1928, setting up a trust fund in excess of $15,000. The powers of the trustee with respect to investment of the funds of the trust estate are set forth as follows in article III of the will:

“First: To keep the trust estate well and safely invested during the term of the trust hereinafter stated. Full power and authority is hereby granted to the trustee to sell and dispose of the whole or any part of the trust estate at any time during the trust and to invest and reinvest the proceeds in accordance with its best judgment. The trustee is authorized in its discretion to continue the trust estate in the securities in which the same may be invested at the time of my death, but upon the sale of any such securities or in case any of them shall be paid when due, in reinvesting the proceeds the investment shall be made only in securities authorized by the laws of the state of Wisconsin for the investment of trust funds.”

At the date of the will, sec. 231.32, Stats. 1927, prescribed the investments permitted to trustees. Prior to the testator’s death, ch. 371, Laws of 1929, somewhat liberalized this section. Subsequent to the date of death of the testator, this section was renumbered as secs. 320.01 to 320.04, and these sections have been repeatedly amended. Ch. 205, Laws of 1949, creating sub. (17) of sec. 320.01, liberalized the trusj-fund laws by permitting thirty-five per cent of the excess over $15,000 in any trust fund to be invested in investments au[266]*266thorized by the statute regulating investments of domestic insurance companies.

The issue is whether the phrase “authorized by the laws of the state of Wisconsin” means the laws as of the date of the will, as of the date of the testator’s death, or as of the date of investment.

The testator had confidence in the business ability of the trust company, as evidenced not only by his selecting it as his executor and trustee but by the words of article III of his will in the sentence preceding the one under construction, where he provided that the trustee should have full power and authority to “invest and reinvest the proceeds in accordance with its best judgment.”

The deceased, when referring to “securities authorized by the laws of the state of Wisconsin” intended to limit his trustee to those securities that the legislature of the state of Wisconsin should from time to time designate as sufficiently safe for the investment of trust funds. As stated by the trial court in its decision :

“He used no words of limitation, limiting the investments to the law as it stood in an}? particular year. He did not speculate as to the year in which he would die; nor did he limit the investments according to the year in which he executed his will. He spoke as of the time of the investment.”

This court held in George Williams College v. Williams Bay (1943), 242 Wis. 311, 316, 7 N. W. (2d) 891, that under the doctrine of “legislation by reference,” when a statute adopts the general law on a given subject, the reference is construed to mean that the law is as it reads thereafter at any given time, including amendments subsequent to the time of adoption.

It is stated .in 2 Scott, Trusts (*1951 Supp.), p. 1224, sec. 227.13:

[267]*267“The propriety of an investment is determined by the terms of the statute at the time when the investment is made and not at the time of the creation of the trust. Application of Arms, 193 Misc. 427, 81 N. Y. S. (2d) 246 (1948). In City Bank Farmers Trust Co. v. Evans, 255 App. Div. 135, 5 N. Y. S. (2d) 406 (1938), it was so held, although the trustee was directed 'by the will to invest in any securities ‘that are now permitted by law to trustees.’ But see Cleveland Trust Co. v. Mansfield, 34 Ohio Op. 26, 71 N. E. (2d) 287 (1945).”

See also In re Hamersley’s Estate (1934), 152 Misc. 903, 274 N. Y. Supp. 303, 309, 310, in which it was held that where will setting up trust estate was dated 1878, trustee’s investments in 1934 were not restricted to investments authorized by law in 1878, because law applicable to investment of trust funds was law of date of investment, unless trust contained specific directions unalterably prescribing investments to be made.

The Cleveland Trust Co. Case (p. 28), referred to above is relied upon by appellants. There the trust was inter vivos. The trustee was given the power of investment and reinvestment and it was provided that “ ‘all new investments to be made shall be of such character as are prescribed by law for the investment of trust funds by safe deposit and trust companies or in such other property or securities as may be taken with the written approval of the parties hereto, or of a majority of the beneficiaries of the trust for the time being, meaning thereby the majority of those who at the time of making the investment are entitled to receive income from the joint fund.’ ”

The court ruled that under this language the trustee would be limited to the law at the time the trust was created, because the settlors knew the law at that time. However, the settlor provided two distinct methods by which his trustee subsequently could be authorized to invest in “nonlegals” — one by the written approval of the settlors, and the other by the [268]*268approval of a majority of the beneficiaries of the trust. If construing the words “prescribed by law” as meaning the law at the creation of the trust was not what the settlors had intended, either they or the beneficiaries of the trust at any time could authorize investments in accordance with any subsequent amendment of the law. In the instant case the testator made no provision for anyone to authorize the trustee to invest in “nonlegals.”

The Ohio court stated (p. 35):

“There has been a material change in the law with respect to investments by trust companies since this agreement was prepared, and while it might be well argued that the parties anticipated this fact and that it was their intention to permit investment in any security which might at any time be authorized or permitted by statute, we are persuaded that this argument fails in the light of the instructions contained in the instrument permitting investments in securities not within the statutory class if the parties or beneficiaries consented to such investments(Italics ours.)

This contradicts appellants’ statement that there is nothing in the decision to indicate that the court would have arrived at a different conclusion had there been no provision in the trust for authorization of broader investments.

The cases cited by appellants relating to the principle of deviation from the terms of the trust are irrelevant as that principle is not here involved. No useful purpose would be served in discussing these and other cases because they are not analogous.

The testator herein did not refer to the chapter or section of the statutes, as did the legislature in the Williams College Case, but merely used the general phrase “laws of the state of Wisconsin for the investment of trust funds.” It is our opinion that the testator by referring to a certain law generally intended that law as a living thing; that is, as amended from time to time.

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Cite This Page — Counsel Stack

Bluebook (online)
48 N.W.2d 601, 259 Wis. 263, 1951 Wisc. LEXIS 361, Counsel Stack Legal Research, https://law.counselstack.com/opinion/first-wisconsin-trust-co-v-pereles-wis-1951.