person who can trace his authority to the will as its source or derives his power mediately or immediately from it.

A position of the respondent is that the Morton Trust Company survived the merger of itself into the Guaranty Company and still exists in and as a part of the latter and that the two corporations are identical. If this position is sound and tenable, it requires that letters testamentary be issued to the Guaranty Company. Whether it be tenable depends upon and is determined by the effects the merger worked. Hence, we must turn to those sections of the Banking Law under which the merger was accomplished (Cons. Laws, chap. 2). It could not have taken place without statutory authority, and the Legislature fixed the indisputable and exclusive effects of it.

Section 36 authorizes any two or more trust companies organized as it specifies "to merge one or more of said corporations into another in the manner" provided in it and the following section. That manner includes the return to the corporation into which the other or others are merged of the certificates of stock held by the stockholders in the company or companies merged into the other and the issuance in lieu thereof by the company into which the merger is effected of new certificates of its own stock; and the appraisal of the value of the shares of stock of dissentient stockholders of the merged company or companies and the payment of that value and cancellation of the stock. Section 39 is: "Effect of merger. Upon the merger of any corporation in the manner herein provided all and singular the rights, franchises and interests of the said corporation so merged in and to every species of property, real, personal and mixed, and things in action thereunto belonging shall be deemed to be transferred to and vested in such corporation into which it has been merged, without any other deed or transfer, and said last-named corporation shall hold and enjoy the same and all rights of property, franchises and interests in the same manner and to the same extent as if the said corporation so merged should have continued to retain the title and transact the business of such corporation; and the title and real estate acquired by the said corporation so merged shall not be deemed to revert by means of such merger or anything relating thereto." Section 40 relates to the rights of creditors and others having relations with merged corporations. It continues and imposes those rights and relations upon the corporation into which the other or others shall be merged, and pro

vides, "and no suit, action or other proceeding then pending before any court or tribunal in which any corporation that may be merged is a party shall be deemed to have abated or discontinued by reason of any such merger, but the same may be prosecuted to final judgment in the same manner as if the said corporation had not entered into the said agreement, or the said lastnamed corporation (that into which the other or others shall be merged) may be substituted in the place of any corporation so merged as aforesaid, by order of the court in which such action, suit or proceeding may be pending."

Those statutory provisions state plainly the effects of the merger of the Morton Company into the Guaranty Company. The former company became (with the nominal exception hereinafter stated) rightless, propertyless and powerless; and the latter company was enlarged by the absorption of all that the former surrendered. The former disburdened itself of each and every obligation, undertaking and relation, and the Guaranty Company absorbed and assumed them all. The Guaranty Company was authorized to issue new shares of stock in favor of the stockholders of the Morton Company in lieu of the shares of the latter surrendered and canceled. But the Morton Company did not surrender its corporate existence. It was not dissolved. It remained a corporation, but for the single purpose and with the sole power of being sued or proceeded against and defending against causes of action alleged to exist against it at the time of the merger. All the other powers bestowed upon it and which were evidenced by its certificate of incorporation and the statute law relating to it were by the merger transferred to the Guaranty Company. A corporation may exist though it possesses no property. A corporation may have a partial as well as a total extinction, and a Legislature may enact that the merged corporation shall be extinguished by the merger, except in so far as the statute shall keep it nominally alive for a specified purpose. Our conclusion is that the Morton Trust Company does not exist within or as a part of the Guaranty Company, and the two are not identical. As a legal being, a corporate entity, it retained the one activity and power, and otherwise is non-existent. It follows that the Guaranty Company cannot validly base its application for letters testamentary upon the ground that it is a continuation of or identical with the Morton Company. For all the purposes of our

consideration the latter ceased to exist when the merger was accomplished.

This conclusion does not bring the discussion to a close. It was within the power of the Legislature to enact that a trust company, into which another trust company lawfully designated as an executor had been merged subsequent to the making and prior to the probate of the will, should be the transferee of the privilege or right of being the executor. No constitutional provision forbids the enactment, and the entire legislative power of the people is vested in the Legislature, except as withheld by the Constitution of the State or restricted by the Federal Constitution. The effects of the enactment would not be in doubt. Applied to the case at bar, and assuming that it existed prior to the death of the testator, it would enable the Guaranty Company to trace to the will the designation and appointment of itself as an executor and require the issuance of letters testamentary to it. The testator in making the will and appointing the executors was and remained throughout the following years of his life subject to the relevant existing statutes. The right to make a testamentary disposition of property is not an inherent right; nor is it a right guaranteed by the fundamental law. Its exercise to any extent depends entirely upon the consent of the Legislature as expressed in their enactments. It can withhold or grant the right, and if it grants it, it may make its exercise and its extent subject to such regulations and requirements as it pleases. It may declare the rules under which the administration of the estate may be committed to executors and make compliance with them mandatory. A testator intends and must be deemed to intend the results which the operation of those rules produce. They affect the testamentary disposition and provisions as though embodied in the will; and in case the cited sections of the Banking Law provide that the merger of the Morton Company transferred to the Guaranty Company the right, privilege or interest, if any, which. the designation of it as an executor originated and thereby entitled the latter to the executorship, thus it was that the testator intended.

In reading the sections we do not regard the intention of the testator, but that of the Legislature. Their language is broadly and conspicuously comprehensive. The merger transferred to the Guaranty Company "all and singular the rights, franchises and interests of" the Morton Company "in and to every species of property, real, personal and mixed, and things in action thereunto belonging," and empowered the Guaranty Company to "hold and enjoy the same and

all rights of property, franchises and interests in the same manner and to the same extent" as the Morton Company would if it "should have continued to retain the title and transact the business of" the Morton Company. This language means not only that every right, privilege, interest or asset of conceivable value or benefit then held by the Morton Company (except the right to be a corporation) should pass into and be absorbed by the Guaranty Company, but also that every right, privilege, interest or asset of conceivable value or benefit then existing which would inure to the Morton Company under an unmerged existence should inure to the Guaranty Company. Nothing appertaining to the Morton Company was to be lost, forfeited or destroyed.

The designation of the Morton Company as an executor created a privilege or an interest in the estate of the testator appertaining to that company. The privilege or interest was not complete or vested; it was incomplete, potential and ambulatory. From it, undisturbed until the testator's death, issued the absolute interest of an executorship and the power to participate in the control and administration of the testator's estate and receive the legal fees and commissions. That interest had no source of origin other than the will and the designation. The testator's death did but complete and vest that which theretofore existed. It existed, although in an incomplete, imperfect and dependent condition, from the making of the will and at the time the merger of the Morton Company was consummated. Ignorance on the part of the Morton Company of its existence did not affect it. Through it that company would have been an executor and entitled to the letters testamentary if it had "continued to retain the title and transact the business of such corporation." The merger transferred it to the Guaranty Company and in effect substituted that company for the Morton Company. The Guaranty Company was entitled to hold and enjoy it even as would the Morton Company under an urmerged existence. By virtue of the statute, effective as a part of the will, the Guaranty Company was designated as an executor, and as such is entitled to receive the letters testamentary.

Philadelphia Bank Earnings

A four year comparison of the earnings and dividends of Philadelphia National banks shows that the rate of earnings on the aggregate capital was 19.6 per cent. in 1912 as against 17 per cent. in 1911 and 20.7 per cent. in 1910.

NEGLIGENCE OF DEPOSItor in faiLING TO NOTIFY BANK OF FORGERY OF A CHECK In the recent case of Crab vs. Citizens' State Bank, decided by the Supreme Court of Idaho (126 Pac. Rep. 520), the court laid down the rule that a depositor will not be prevented by his delay in failing to promptly notify the bank of the forgery of a check which it has paid out of his account, from recovering the amount of the check from the bank, provided the bank had notice at the time it paid such check that it was drawn without authority and was not to be paid out of the private account but out of the account of a corporation.

The plaintiff was the president and general manager of a corporation engaged in mercantile business. The company had been doing its banking business with the defendant bank and the plaintiff had an individual account with the same institution. He was carrying the two accounts separately. In 1908, as president and general manager of the corporation, he entered into a contract with William Brothers whereby it was agreed that Brothers would take the management of the corporation and conduct its business, for which services he was In to receive one-half of the net profits. his capacity as general manager, Brothers issued checks from time to time which were paid by the bank. At first the checks seem to have been on the printed form made specifically for the corporation and in issuing these checks Brothers signed the plaintiff's name but made no attempt to imitate his signature and the bank knew that the signature was not made by the plaintiff. When this particular form of check was exhausted. Brothers began using the ordinary check to which he did not sign the name of the corporation but simply signed the name of the plaintiff. Later on the account of the corporation ran low and the

bank paid about $600 of these checks and charged them against the individual account of the plaintiff. The plaintiff was in California and was checking against his personal account until he had reduced it to the sum of $561.

It appeared that Brothers, the manager of the corporation, had told the cashier that he must not pay any checks which he (Brothers) had issued out of the plaintiff's individual account, for the reason that he had no authority to check against that ac

count.

The court decided that the relation which exists between a bank and its depositor is that of debtor and creditor; that before a bank can charge the account if its depositor by a check drawn by someone else, it must show authority from the depositor; that the bank had notice that the checks drawn by Brothers should not be paid from the plaintiff's account and that consequently the bank was liable to the plaintiff for the checks signed by Brothers as manager of the corporation which had been paid out of the individual account of the plaintiff.

DUTY OF TRUSTEE TO RENT TRUST
PROPERTY

A judgment was entered against the Madison Trust Company surcharging its accounts, as substituted trustee, with the sums of $1,250 and $371.17, the first item being an alleged excess of payment for attorney's fees and the second the amount of trustees' commissions disallowed because it had failed to rent certain real estate.

The reason for the failure to lease the property was the express and reiterated requests made by the life tenant to the trustee that it should not be leased, as she desired to reserve it for her use as a home: that she had occupied it as her home since

1874, except during certain years when it was rented with her consent; that she owned the furniture therein in her own right; that the house being a summer or country home could not be rented save as a furnished house; that she had not consented to the use of her furniture in said house by a tenant thereof during the period in question; and that efforts finally made in 1910 to secure a tenant were unsuccessful. No payments were made from the principal of the trust fund to offset the loss of rents.

In deciding in favor of the trust company on this point the court said, that where the life tenant, to whom would be paid any rent collected from the realty, directs the trustee not to rent the property but to maintain it unoccupied for reasons which she deems sufficient, it is not only the privilege, but it is the duty, of the trustee to obey such direction.

The payment of attorney's fees made by the trust company was also allowed, for the reason that under the will the trustee was authorized to apply such portion of the capital of the trust fund, as it may deem advisable, to the use of the daughter who was the life tenant. The trustee exercised the power thus conferred and no objection was ever made by the beneficiary. Consequently, the entire payment was allowed.

MISTAKE IN PAYMENT OF TRUST FUND The recent case of Union Trust Company vs. Gilpin, decided by the Supreme Court of Pennsylvania (84 Atl. Rep. 148) is authority for the proposition that where an officer of a trust company pays over a trust fund by mistake to the wrong person, the amount thus paid may be recovered from the person receiving it.

In this particular case a will provided for two separate trust funds with the Union Trust Compary as trustee in one case and the United States Trust Company as the trustee in the other. Two sums of $10,000 each were left to the United States Trust Company to be held in trust for two sisters for life with remainder over to the survivor on the death of either. Another paragraph of the will left two sums of $10,000 each to the Union Trust Company as trustee for the benefit of the same sisters, but with remainder to other persons.

One of the sisters died and the Union Trust Company, as the result of a mistake on the part of some of its officers, turned over the fund of $10,000 which it held, to the other sister. The mistake undoubtedly occurred because of a hasty reading of the similar provisions of the will.

The plaintiff trust company sought to recover from the sister the amount thus paid by mistake; but the defendant alleged that she had spent the money, had thus changed her status, and consequently the plaintiff was prevented from recovering because of its own negligence.

In deciding in favor of the right of the trust company to recover, the court said: "There is neither reason nor authority, however, to support the theory that the mere fact of the money having been spent amounts to an alteration of the defendant's legal position."

LIABILITY OF STOCKHOLDERS OF
INSOLVENT BANK

A decision handed down recently by the Appellate Division of the Supreme Court of New York State in a test case involving the right of the State Banking Department to levy assessments against stockholders of an insolvent banking institution in advance of a complete liquidation of its assets makes the stockholders or any insolvent institution liable for any deficiency to the extent of the pro rata shares that each holds. This decision, unless reversed by the Court of Appeals, according to Frank M. Patterson, representing the State Banking Department, will tend to re-establish the Stockholders' Liability act, which was passed by the Legislature about twenty years ago but which has been generally unobserved because of alleged flaws found in it by some of the courts of the State.

The action was brought by the Banking Department in the case of the defunct Lafayette Trust Company of Brooklyn against August Scharman and others, started shortly after the insolvency of the trust company in 1909.

A Patriotic Creed

The publicity department of the Union Trust Company of Providence, R. I., displays good judgment in distributing among its patrons, just at this period in National political and Government affairs, a neatly printed placard presenting "A Patriotic Creed." It is an affirmation of faith in the country, its constitution, laws and institutions. It is an expression of firm belief in the future growth and welfare of the country, and in the ability of the American people to work out their destiny along wholesome lines.

The Trust Company of the South, Atlanta, Ga., has been chartered with a paidin capital of $125,000.

It has been the custom at the annual meetings of the Trust Company Section, American Bankers' Association, to receive reports from the various representatives and State Vice-Presidents, regarding legislation and conditions appertaining to trust companies in different States. Owing to the importance of the addresses and subjects under discussion at the last annual meeting of the Section at Detroit, the reading of the reports from the State VicePresidents was suspended. These reports are published herewith and contain interesting information, viz.:

MASSACHUSETTS

Mr. Herbert A. Rhoades, president of the Dorchester Trust Company, Boston, and vice-president of the Trust Company Section for Massachusetts, submitted the following report: "The situation in Massachusetts remains practically unchanged since last year, the trust companies having had a fairly good year with a steady increase in deposits and assets. There have been five new charters granted, of which number three companies have opened for business. A call for payment has been made for the capital of one more which will open the middle of this month. Three of these new charters represent conversion of National banks.

"In the legislative field there has been very little of interest in banking matters, the principal changes being acts to enable trust companies to give security for deposits of postal savings funds; to shorten the time for payment of accounts in cases of lost pass books and for the liability of a bank for the payment of forged, raised or otherwise altered negotiable instruments; and to authorize the bank commissioner to give certain information to the National bank examiners, the banking departments of other States and others, relating to institutions under his charge.

"The Inheritance Tax Law has been amended by repealing the tax on the personal estate of a non-resident decedent

within Massachusetts so that banks and others may transfer and deliver any personal property without requiring the consent of the tax commissioner or evidence that the inheritance tax has been paid.

"Many of our trust companies are meeting a need in their several localities by limiting their real estate mortgages to short time loans for construction purposes, leaving the placing of the permanent mortgages to savings banks and trustees. By so doing, they encourage the development of the community and keep their funds in a more or less liquid condition, as such loans are invariably paid at or near maturity.

"The increase in the number of trust companies and the tendency to convert National banks into such institutions testifies to the confidence in which they are held. In the early part of the year Hon. Arthur B. Chapin, who had been bank commissioner since 1909, resigned to accept a vice-presidency in the American Trust Company, Boston, and was succeeded by Hon. Augustus L. Thorndike."

CALIFORNIA

Mr. M. P. Lilienthal, secretary of the Anglo-California Trust Company, San Francisco, and vice-president for California, writes: "In reviewing the history of the trust companies in the State of California for the past year, one thing stands out prominently as affecting the future development of these institutions; namely, the passing of the Public Utilities Act on March 23, 1912.

"Although the Railroad Commission of California was created by the constitution of 1879, its jurisdiction was confined to transportation companies. It is only during the last year that this Commission has been given power to regulate and control all classes of public service corporations. When this act first became a law, the business community was considerably opposed to it, fearing that it would retard the development of the State by placing too many restrictions on our large corporations and