Michigan Trust Co. v. Bronson

The sole question presented on this appeal is the right of the Michigan Trust Company, a foreign corporation, to act as trustee, and, as such, to have distributed to it the residue of the estate of Myra Josephine Wellings,

The decedent appointed her husband, or, in the event of his death, the Michigan Trust Company, her executor, and appointed appellant trustee under the will, with certain enumerated powers. The husband of the decedent predeceased her, but when the will was filed for probate the appellant, not having the paid-up capital required by the laws of California to permit it to act, did not seek to be appointed executor. The will was admitted to probate, and letters of administration with the will annexed were granted to George C. Bronson. All of the property of the decedent, valued at $80,784.18, was located in California, and, according to the inventory, consisted of moneys on deposit, stocks, bonds, promissory notes secured by mortgage, household and personal effects, and certain real estate situated in Los Angeles County. Due administration was had, and when the time was ripe for closing the estate the administrator with the will annexed rendered his final account and report, together with his petition for distribution of the residue of the estate to the granddaughters, nieces, and nephews of the decedent. Appellant, having in the meantime increased its capital stock to an amount in excess of the capitalization required in order to entitle it to act as trastee in this state, filed its objection to the petition, and sought to have distribution made to it as trustee under the will. The matter was heard by the probate court on an agreed statement of facts. By stipulation, all objections of the

The appeal was first presented on briefs without argument. In a brief, filed by amicus curiae, the constitutionality of the Bank Act of California was challenged. Because of the importance of the questions involved, the submission was set aside and the case was again placed on the calendar for oral argument as to certain points. On the suggestion of the court, the attorney-general and the attorney for the state superintendent of banks were permitted to join with appellant in the further presentation of the appeal.

[1] An executor appointed by will has the right to act unless there is some express provision of law disqualifying him. (Bauquier’s Estate, 88 Cal. 302 , 309 [ 26 Pac. 178 ].) [2] A trustee under a will has even a more substantial right to be -recognized by the court. He does not become a trustee by virtue alone of the decree of distribution, although his fuller and more complete powers and duties are, thus devolved upon him. [3] A testamentary trustee is a devisee under the will, and takes as trustee under the will at the death of the testator. (Civ. Code, sec. 1341; Estate of O’Connor, 2 Cal. App. 470 , 475 [ 84 Pac. 317 ] ; Title Ins. & Trust Co. v. Duffill, 191 Cal. 629 [ 218 Pac. 14 ].) He does not derive title from the decree of distribution, which merely declares the title that accrued under and by the will, but from the will itself. (Western Pac. Ry. Co. v. Godfrey, 166 Cal. 346 , 349 [Ann. Cas. 1915B, 825, 136 Pac. 284 ].) [4] When an estate is devised to trustees it becomes their duty, having accepted the trust, to obtain control of the trust property. (3 Pomeroy’s Equity Jurisprudence, 4th ed., sec. 1067.) [5] When the desire of a testator can be fully carried out only through trustees, their appointment as such implies a wish on the part of the testator that it be so done. (Estate of O’Connor, supra.) Therefore, unless some express statutory prohibition be found which will prevent the

Appellant claims the right to act as trustee under the will of Mrs. Wellings by virtue of authority conferred by section 7 of the act to define and regulate the business of banking, designated as the “Bank Act,” as amended (Stats. 1917, pp. 598-600), which provides, in part, “that a trust company incorporated in another state may have or exercise in this state such powers as are permitted to foreign corporations by the provisions of section ninety of this act and may be appointed and may accept appointment and may act in this state as executor of or trustee under the last will and testament of any deceased person, upon giving the bond required in such cases of individuals unless waived by the last will and testament making such appointment and by taking and subscribing an oath for faithful performance of such trust by the president, vice-president, secretary, manager, or trust officer of said corporation; provided, that such superintendent of banks, for the time being, shall be attorney of such foreign corporation qualifying or acting in this state as such executor or trustee, upon whom process against such foreign corporation may be served in any action or legal proceeding against such executor or trustee affecting or relating to the estate or property represented or held by such executor or trustee, or any act or default of such foreign corporation in reference to such estate or property, and it shall be the duty of any such foreign corporation so qualifying or acting to file in the office of said superintendent of banks a copy of its articles of incorporation, or of the statute chartering such corporation, certified by its secretary under its corporate seal, together with the postoffice address of its home office, and a duly executed appointment of said superintendent of banks as its attorney to accept service of process as above provided, and said superintendent of banks, when any such process is served upon him, shall at once mail the papers so served to the home office of such corporation.” [Italics ours.]

Respondents challenge the constitutionality of the Bank Act, in so far as it applies to the right of foreign corporations to act as trustees in California, upon several grounds. Their first contention is that if section 7 of the act tends to

Appellant argues that acting as trustee in this one instance would be but a single and isolated act of a foreign trust company in receiving property in this state as a trustee under a will and testament, and would not amount to conducting or doing business within the state. The phrase “to transact business,” as used in the constitution, is equivalent to the words “to do business” found in the statutes of many states prohibiting foreign corporations from “doing business” in such states until they have complied with certain prescribed local requirements. In most jurisdictions it has been held to have reference to the con

[8] It must therefore be determined whether or not, under the provisions of the Bank Act, a foreign trust eor

When this matter was first considered on appeal it was suggested in the brief of amicus curiae, and it is now urged by respondents, that the provisions of the Bank Act relating

It cannot be disputed that, in the ordinary sense of the term, a “bank” is not a “trust company,” nor is a “trust company” a “bank.” The legislature, by merely defining a certain kind of institution as a bank, does iiot in fact make it a bank in the ordinary commercial meaning of that word. The purpose of the Bank Act is not to change the nature of the business done by any of the corporations which are made subject to the act, but is purely one of regulation. For the purpose of regulation, and to specify what kinds of corporations come within the purview of its provisions, the legislature has used the word “bank” to mean not only any incorporated banking institution which shall have been created to conduct the business of receiving money on deposit, but also such corporations as are permitted by the act to carry on business which has, by the trend of common understanding and opinion, come to be regarded as being appropriate and relevant to the banking business, functions which, in the judgment of the legislature, make the business of the banks more successful. The power of the legislature to do this is, we think, beyond question. It has had the right, since California became a state, to provide for the formation of banks under general laws. (Const. 1849, art. IV, sec. 34; Const. 1879, art. XII, see. 5.) The last-named provision was amended in 1910 to extend its power in the matter of regulating the business of banking. [9] The right of the legislature to exercise its judgment as to the necessity for creating banks includes the power to determine "the scope and character of the functions which shall

The functions of a bank may be variously regarded. “Originally the business of banking consisted only in receiving deposits, such as bullion, plate, and the like, for safekeeping until the depositor should see fit to draw it out for use, but the business, in the progress of events, was extended, and bankers assumed to discount bills and notes and to loan money upon mortgages, pawn, or other security, and at a still later period to issue notes of their own intended as a circulating currency and a medium of exchange

Corporations and associations formed for other purposes may take on the essential functions of a banking business. In such event the power of the state to regulate the business is unquestioned. For instance, trust companies that receive deposits and make loans perform two of the most important functions that are performed by banks generally.

We are also satisfied that the Bank Act embraces but one subject, and that subject is sufficiently expressed in its title. [12] It is now well settled that the constitutional provision requiring the subject of the act to be expressed in its title must be liberally construed, and that all that is required to be contained therein in order to meet the constitutional requirement is a reasonably intelligent reference to the subject to which the legislation is to be addressed. [13] When the purpose of the Bank Act as expressed in its title is borne in mind, it must appear, from what we have already said, that the provisions of the act relating to trust companies, and to the appointment of such trust companies as executors and trustees, .are logically germane to the title of the act, and are included within its scope. (Estate of McPhee, 154 Cal. 385 , 389 [ 97 Pac. 878 ]; Abeel v. Clark, 84 Cal. 226 , 229 [ 24 Pac. 383 ].) [14] The general purpose of a statute being declared, the details provided for its accomplishment will be regarded as necessary incidents. (Ex parte Liddell, 93 Cal. 633 , 637 [ 29 Pac. 251 ].) [15] The procedure outlined by the legislature for the appointment and qualification of foreign trust companies acting as executors and trustees, and providing the method by which they shall carry on the administration of the trusts committed to them, are part of the comprehensive scheme contemplated, and afford an appropriate means of effecting one of the main purposes of the law. (Robinson v. Kerrigan, 151 Cal. 40 , 50 [ 121 Am. St. Rep. 90 , 12 Ann. Cas. 829, 90 Pac. 129 ]; Buelke v. Levenstadt, 190 Cal. 684 [ 214 Pac. 42 ].)

[17] The trial court went beyond the stipulation of the parties as to the sole question to be decided in the lower court, and found that it would be detrimental, unnecessary, and not to the best interests of the estate to appoint appellant trustee. In support of this finding respondents rely upon the stipulation in the agreed statement of facts to the effect that the decedent, before her death, received payment of a mortgage on Michigan property drawing six per cent interest, and invested the amount at seven per cent interest in Los Angeles County, and that the going rate of interest in California is from one to three per cent higher than in Michigan. Assuming it was proper to rely on this point on the appeal, there is nothing in the agreed statement to justify the court in saying in advance of any act of the appellant in connection with the administration of the estate that it would be detrimental or not to the best interests of the estate that it be appointed trustee. It is not even intimated that the Michigan Trust Company intends to remove any part of the estate from the state of California pending the termination of the trust, and, as already pointed out, after distribution the superior court will not lose jurisdiction of the estate but will retain such jurisdiction for the purpose of the settlement of accounts under the trust; In

The order of the lower court is reversed.

Kerrigan, J., Lennon, J., Lawlor, J., Seawell, J., Wilbur, C. J., and Myers, J., concurred.

Rehearing denied.

All the Justices concurred.