§ 100-B — Investments as fiduciary; when interest is to be paid; preference

New York § 100-B

• Jurisdiction: New York
• Law BNK: Banking
• Art. 3: Banks and Trust Companies

Text

§ 100-b. Investments as fiduciary; when interest is to be paid;\npreference. 1. Investments. All investments of money received by any\ntrust company as executor, administrator, guardian, trustee of a trust\nof any kind, receiver, committee, conservator or depositary, shall be at\nits sole risk, and for all losses of such money the capital stock,\nproperty and effects of the trust company shall be absolutely liable,\nunless the investments are such as are proper when made by an individual\nacting as trustee, executor, administrator, guardian, receiver,\ncommittee, conservator or depositary, or such as are permitted in and by\nthe instrument or words creating or defining the trust. But no corporate\nfiduciary shall purchase securities from itself. Any moneys of any such\nestate or fund awaiting investment or distribution may be held on\ndeposit by such trust company in its own name, subject to the provisions\nof subdivision four of this section; provided that appropriate entries\nshowing the share or interest of each such estate or fund in the moneys\nso held on deposit shall, at all times, appear upon the records of such\ntrust company.\n 2. On and after September first, nineteen hundred thirty-six, no trust\ncompany shall invest in any part interest in a bond and mortgage or note\nand mortgage on behalf of any estate or fund held by such trust company\nas executor, administrator, guardian, personal or testamentary trustee,\nreceiver, committee, conservator or depositary except that if the\ninstrument creating such estate or fund has authorized such trust\ncompany as executor, administrator, guardian, personal or testamentary\ntrustee, receiver, committee, conservator or depositary to invest in any\npart interest in a bond and mortgage or note and mortgage insured by the\nfederal housing commissioner such trust company may so invest and if the\ninstrument creating an employee benefit trust has authorized such trust\ncompany to invest in any part interest in a bond and mortgage or note\nand mortgage, such trust company may so invest. Any part interest in a\nbond and mortgage or note and mortgage heretofore apportioned to any\nestate or fund and held by such trust company as executor,\nadministrator, guardian, personal or testamentary trustee, receiver,\ncommittee, conservator or depositary, and outstanding at any time in the\nhands of any estate, fund or person may be repurchased at its face value\nby such corporation individually. Such trust company, in any case where\nit shall have apportioned or transferred a part interest in any bond and\nmortgage or note and mortgage whether to any estate or fund held by it\nalone or in conjunction with another person or otherwise, shall be\nauthorized and empowered, in behalf of all persons interested therein,\nto collect the principal and interest and to satisfy and discharge the\nmortgage on receiving payment thereof in the amount and in the manner\nspecified in the bond and mortgage or note and mortgage, to pay the said\nprincipal and interest to the persons entitled thereto and generally to\nexercise all of the options reserved to the mortgagee, to enforce in its\nown name by appropriate action or proceeding, including foreclosure, any\nand all of the covenants in the said bond and mortgage or note and\nmortgage, to take such other measures for the protection of the mortgage\nloan and the preservation of the security and the management of,\nutilization and sale of any real estate which may be acquired on\nforeclosure as may be necessary and appropriate and to exercise all\nother rights of ownership in respect of the entire bond and mortgage or\nnote and mortgage. In case any bond, note or mortgage shall be held by,\nor in the name of, such trust company and it shall hold any part\ninterest therein, acting as a fiduciary, whether alone, or in\nconjunction with another person or otherwise, it may, prior to April\nfirst, nineteen hundred sixty-nine, waive or modify or agree to waive or\nmodify, either with or without consideration and prior or subsequent to\nmaturity, any terms and conditions thereof, including the rate of\ninterest, and extend or re-extend or agree to extend or re-extend such\nbond and mortgage or note and mortgage, for a period of not more than\nfive years from the time of such extension, by agreement with the owner\nof the real property subject to the lien thereof, upon the consent of\nthe holders of such part interests to the extent of sixty-six and\ntwo-thirds per centum of the whole amount of such bond and mortgage or\nnote and mortgage, notwithstanding that, at the time of such waiver,\nmodification, extension or agreement, the value of such real property\nmay be less than that required by law for an original investment of such\nan amount therein by such holder and, in case any such investment is\nguaranteed, such trust company may also extend or re-extend or agree to\nextend or re-extend the time of payment under the guaranty for a like\nperiod from its due date, and may release or agree to release such\nguaranty or from time to time waive or modify or agree to waive or\nmodify any terms and conditions thereof, including the rate of interest;\nprovided however, that no such waiver, modification, extension or\nagreement shall be made or agreed to unless, at least fifteen days prior\nthereto, such trust company shall have notified each holder of such a\npart interest in such bond and mortgage or note and mortgage of the\nterms and conditions of such contemplated waiver, modification,\nextension or agreement. Such notice shall be given by mailing the same\nby registered mail to the address or place of residence of each holder\naccording to the records of such trust company. The notice hereinbefore\nprovided for shall not be required to be given to any holder of such a\npart interest in such bond and mortgage or note and mortgage (1) who, at\nthe time of the mailing of such notice to holders of part interests in\nsuch bond and mortgage or note and mortgage, was not shown on the\nrecords of such trust company to be such holder, or (2) who, at any time\nwhether before or after any such waiver, modification, extension or\nagreement shall have been made or agreed to, shall have consented to\nsuch waiver, modification, extension or agreement. Any such consent\nshall also be binding upon and shall be deemed to be the consent also of\neach and every holder of the part interest in such bond and mortgage or\nnote and mortgage or of any part of such part interest with respect to\nwhich such consent was given who, at the time such consent was given,\nwas not shown on the records of such trust company to be such holder\nwhether or not such holder shall have become such holder before or after\nsuch consent was given. Any holder to whom the notice hereinbefore\nprovided for is required to be given as hereinbefore provided and who\nobjects to such waiver, modification, extension or agreement shall have\nthe right to apply, within fifteen days after such notice shall have\nbeen mailed to such holder as hereinbefore provided, to the supreme\ncourt of the county in which the real property securing such mortgage is\nlocated and, subject to the discretion of the supreme court in the\npremises, to obtain an order enjoining such waiver, modification,\nextension or agreement. In the event of the granting of such an order,\nany holder shall have the right to apply to such supreme court and,\nsubject to the discretion of the supreme court in the premises, to\nobtain an order directing a partition of such bond and mortgage or note\nand mortgage by a judicial sale thereof. Such sale shall be upon such\nnotice and advertisement and at such time and place and in such manner\nas the court or a justice thereof may direct, but at least fifteen days'\nnotice thereof shall be given to each holder. The proceeds of the sale\nof such bond and mortgage or note and mortgage after deducting the\nexpenses of such sale, shall be paid into the supreme court and shall be\ndistributed among such holders according to their respective interests\ntherein. Such trust companies shall have all the powers heretofore had\nunder this section or any other provision of law with respect to\ninvestments in part interests in bonds and mortgages or notes and\nmortgages for the protection, preservation and liquidation of the trust\nproperty. It is the intent of this subdivision to prohibit after August\nthirty-first, nineteen hundred thirty-six, any future apportionments or\ninvestments of any part interests in bonds and mortgages and notes and\nmortgages to or investments in part interests of bonds and mortgages and\nnotes and mortgages for any estate or fund of which such trust company\nis executor, administrator, guardian, personal or testamentary trustee,\nreceiver, committee, conservator or depositary, except as permitted by\nthis subdivision. Such trust company, however, shall not transfer to any\nestate or fund any part interests in bonds and mortgages or notes and\nmortgages heretofore purchased, or invested in, from itself or from any\nother estate or fund.\n Nothing contained in this act shall be construed to affect any\ninvestments in part interest in bonds and mortgages apportioned or\ntransferred, prior to September first, nineteen hundred thirty-six, to\nany estate or fund of which such trust company is executor,\nadministrator, guardian, personal or testamentary trustee, receiver,\ncommittee, conservator or depositary, nor to affect any action\nheretofore taken in accordance with law with respect to such bonds and\nmortgages or part interests in said bonds and mortgages; nor to affect\nthe right of any such trust company to transfer or apportion any such\ninvestment from an estate or fund to a succeeding interest created by\nthe same instrument under which the investment was made; nor shall it be\nconstrued to impair or otherwise affect the power of such trust company\nto apportion to any estate, fund or person interested in such mortgage\nits or his proportionate share of the consideration, consisting in whole\nor in part of evidences of indebtedness secured by mortgages on real\nproperty received by such trust company on the sale of real property\nacquired by foreclosure of such mortgage, or otherwise, and to exercise\nwith respect to such mortgages on behalf of such estates, funds, or\npersons the same powers reserved with respect to the original mortgage.\n 3. Preference. If dissolved by the legislature or the court, or\notherwise, or liquidated by the superintendent or otherwise, the debts\nfrom any trust company as guardian, trustee, executor, administrator,\ncommittee, conservator or depositary, shall be entitled to priority of\npayment from the assets of such trust company on an equality with any\nother priority given by this chapter.\n 4. Interest. On all sums of money not less than one thousand dollars,\nwhich shall be collected, received and held as principal by a trust\ncompany acting as executor, administrator, guardian, trustee, receiver,\ncommittee or conservator under the appointment of any court or officer,\nor in any fiduciary capacity under such appointment, or as a depositary\nof moneys paid into court, interest shall be paid by such trust company\nfrom sixty days after the receipt thereof until the moneys so received\nshall be duly expended or distributed, at a rate equal to the maximum\nrate per annum then being paid by such trust company on savings\ndeposits, except that in the case of a trust company acting as executor\nor administrator interest shall not be paid, and the grace period of\nsixty days herein provided for shall not be deemed to begin, until five\nmonths after the date of issuance of letters testamentary or of\nadministration to it; provided however that such trust company shall not\nbe required to allow any interest upon any such moneys payment of which\nis prohibited under any order, regulation or ruling issued under or\npursuant to the "Trading with the Enemy Act" and any amendments thereto,\nor under or pursuant to any other law, so long as such prohibition shall\nremain in force and effect. If income be accumulated for a minor or\nsurplus income in excess of expenditures be held for investment by the\ncommittee of an incompetent or the conservator of a conservatee, but not\notherwise, any uninvested balance of such income shall be treated as\nprincipal upon which interest shall be paid as provided in this\nsubdivision. If interest moneys payable hereunder or any part thereof\nshall not annually be expended or distributed pursuant to the terms or\nprovisions of the trust under which such moneys are held, the amount\nthereof not so expended or distributed shall be accumulated by such\ntrust company for the benefit of the parties interested in such trust\nfund, and shall be added to the principal to constitute a new principal\nupon which interest shall thereafter be computed. The word "trustee" as\nused in this subdivision shall mean a trustee appointed by will or by\nany court, and the words "savings deposits" as used in this subdivision\nshall mean time deposits with respect to which the depositor is not\nrequired by the deposit contract, but may at any time be required by\nsuch trust company, to give notice in writing of an intended withdrawal\nnot less than fourteen days before such withdrawal is made, and which is\nnot payable on a specified date or at the expiration of a specified time\nafter the date of deposit. For the purposes of this subdivision only,\nmoneys on which interest is payable as provided herein shall not be\ndeemed to be demand deposits.\n