New York Law Review

Tag: Trusts

  • In re Estate of Wallens, 8 N.Y.3d 120 (2006): Trustee’s Duty of Good Faith in Trust Administration

    In re Estate of Wallens, 8 N.Y.3d 120 (2006)

    Even when a trust instrument grants broad discretion to a trustee, the trustee must still act reasonably, in good faith, and solely in the beneficiary’s best interest when distributing trust funds.

    Summary

    This case concerns a dispute over a cotrustee’s use of trust funds to pay for the beneficiary’s private school education and medical expenses, which the cotrustee was allegedly obligated to pay personally under a divorce decree. The New York Court of Appeals held that even with broad discretionary powers, a trustee must act in good faith and in the beneficiary’s best interest. Because the cotrustee (who was also the beneficiary’s father) did not seek court approval before using trust funds for expenses he was personally obligated to cover, the court remitted the case for a hearing to determine whether his actions were in good faith and furthered the beneficiary’s interests.

    Facts

    Burton Wallens created a testamentary trust for his granddaughter, Maggie, designating her father, Charles (also Burton’s son), and attorney Richard Yellen as cotrustees. The trust allowed the trustees to distribute income and principal for Maggie’s “support, education, maintenance and general welfare.” Maggie’s parents divorced before Burton’s death, and the divorce decree required Charles to pay for Maggie’s private school and uninsured medical expenses. After Burton’s death, Charles, as cotrustee, used trust funds to pay for Maggie’s private school. Later, a court order relieved Charles of his child support obligations, directing the trust to cover Maggie’s college costs. Maggie objected to Charles’s use of trust funds for her private secondary school and certain health care expenses, arguing he was personally obligated to pay those.

    Procedural History

    Maggie petitioned for an accounting, objecting to the use of trust funds. The Surrogate’s Court initially sustained Maggie’s objections but was reversed by the Appellate Division, which dismissed the objections. The Appellate Division found that the father did not breach his fiduciary duty. The Court of Appeals reversed the Appellate Division, ordering a hearing to determine whether the father acted in good faith and in Maggie’s best interests.

    Issue(s)

    Whether a trustee, vested with broad discretion to distribute trust funds, breaches their fiduciary duty by using trust assets to cover expenses they are personally obligated to pay, without first seeking court approval, and if such expenditures were made in good faith and in the beneficiary’s best interest.

    Holding

    Yes, because even with broad discretionary powers, a trustee must act reasonably, in good faith, and solely in the beneficiary’s best interest. Using trust funds for expenses the trustee is personally obligated to pay, without court approval, warrants a hearing to determine if the actions were in good faith and served the beneficiary’s interests.

    Court’s Reasoning

    The Court of Appeals emphasized that a trustee owes a duty of “undivided and undiluted loyalty” to the beneficiary. Quoting Meinhard v. Salmon, the court stated that “[a] trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior.” The court acknowledged the trust instrument allowed for expenditures related to Maggie’s education and welfare. However, it stressed that even with broad discretion, a trustee must act reasonably and in good faith. The court noted that Charles sought court approval for college expenses but not for secondary school tuition and medical costs he was already obligated to pay under the divorce decree. Because of this potential conflict of interest and failure to obtain prior approval, the Court remitted the case to determine whether Charles’s actions were genuinely in Maggie’s best interest. The court stated, “Thus, we remit the matter to Surrogate’s Court for a hearing to determine whether the expenditures were authorized in good faith and in furtherance of the beneficiary’s interests.”

  • Matter of Cord, 58 N.Y.2d 539 (1983): Testator’s Intent Controls Tax Apportionment Over Trust Provision

    Matter of Cord, 58 N.Y.2d 539 (1983)

    A testator’s explicit direction in a will regarding the payment of estate taxes takes precedence over a conflicting provision in a prior inter vivos trust, even if the will does not explicitly reference the trust.

    Summary

    Charlotte Cord created an irrevocable inter vivos trust directing the trust to pay any estate taxes assessed due to its existence. Forty years later, she executed a will directing that all death taxes be paid out of her general estate. The executor sought a determination of whether the will superseded the trust provision. The court held that the will’s clear direction for tax payment from the general estate controlled, even without specific mention of the trust. The court reasoned that the testator’s intent, as expressed in the will, is paramount and EPTL 7-1.9 did not apply because the will provision did not negatively impact trust beneficiaries.

    Facts

    Charlotte Cord established an irrevocable inter vivos trust with a provision (Article Third) mandating the trustees to pay estate taxes assessed due to the trust’s existence at her death.
    Decades later, Cord executed a will containing a clause (Article 2) directing that all death taxes, regardless of the property’s source (whether passing under the will or not), be paid from her general estate without allocation or proration.
    Decedent’s husband, as executor, initiated proceedings after his demand for tax payment from the trust corpus was rejected; the trust beneficiaries are Cord’s children from a prior marriage.

    Procedural History

    The Surrogate’s Court initially ruled that the trust should pay its proportionate share of death taxes, finding the will did not specifically relieve the trust and alternatively citing non-compliance with EPTL 7-1.9.
    The Appellate Division reversed, construing the will’s language to impose an unqualified obligation on the estate to pay all death taxes. It found the draftsman’s lack of awareness of the trust provision irrelevant.
    The case reached the New York Court of Appeals on appeal as of right.

    Issue(s)

    1. Whether a general tax apportionment clause in a will supersedes a specific tax payment provision in a previously established inter vivos trust where the will makes no explicit reference to the trust.
    2. Whether EPTL 7-1.9 requires the consent of trust beneficiaries to alter a tax apportionment scheme when the alteration does not diminish the benefits available to them.

    Holding

    1. Yes, because the testator’s intent, as expressed in the will, is paramount, and EPTL 2-1.8 permits the testator to override statutory apportionment rules with a clear direction in the will.
    2. No, because EPTL 7-1.9 is intended to protect trust beneficiaries from unauthorized invasion of the trust, and the will’s tax payment provision does not diminish the benefits available to them; therefore, their consent is not required.

    Court’s Reasoning

    The court emphasized that the primary objective in will construction is to ascertain the testator’s intent from the four corners of the will, not the draftsman’s intent. The court stated, “relevant in the end was not what her scrivener, but what the testatrix had ‘in mind’.”
    The will’s broad language, directing payment of taxes on all property, including “property not passing under this Will,” clearly indicated the testator’s intent to exonerate all property from tax apportionment.
    EPTL 2-1.8 allows a testator to override statutory tax apportionment rules with a clear direction in the will. The decedent, by creating the trust, retained the right to later shift the tax burden through her will.
    The court addressed the applicability of EPTL 7-1.9, which requires consent of all parties beneficially interested to revoke or amend a trust. The court held that this statute is designed to protect beneficiaries from unauthorized invasion of the trust, stating that the design was “to protect trust beneficiaries against unauthorized or unwarranted invasion”. Since the will’s tax payment provision only added to, and did not diminish, the benefits available to the beneficiaries, consent was not required.
    The court acknowledged that the decedent “must be assumed to have understood that she retained the right subsequently to shift the burden of the tax by an appropriate clause in her will”.

  • In re Estate of Lefft, 44 N.Y.2d 915 (1978): Requirements for Establishing a Valid Gift

    In re Estate of Lefft, 44 N.Y.2d 915 (1978)

    To establish a valid gift, there must be clear and convincing evidence of donative intent, delivery of the gift, and acceptance by the donee.

    Summary

    This case addresses the requirements for a valid gift, particularly the element of delivery, when a decedent’s children claimed ownership of artwork based on an alleged gift from their father. The court found that while a trust created by the decedent was valid, it did not benefit his children. Furthermore, even if the testimony of a witness (the decedent’s former spouse) were admitted, the children failed to prove a valid gift due to lack of evidence of delivery of the artwork. The court emphasized that a gift must be established by clear and convincing proof, including delivery of the property.

    Facts

    Harold Lefft created a trust with himself, his wife Geraldine, and a third trustee. The trust agreement stated Harold’s intention to retain certain artwork for his children, but it didn’t provide for any disposition of the artwork (corpus) or proceeds from its sale to the children. Harold later executed a separation agreement with Geraldine, terminating the trust. After Harold’s death, his children claimed he had gifted them the artwork prior to his death. The Surrogate Court deemed Geraldine incompetent to testify about the alleged gift due to the dead man’s statute. The children appealed, arguing that Harold had made a gift of the paintings to them.

    Procedural History

    The Surrogate’s Court ruled against the children, finding that Harold Lefft did not create a valid trust for their benefit and that Geraldine Lefft was incompetent to testify about the alleged gift. The Appellate Division affirmed the Surrogate’s Court decision. The children then appealed to the New York Court of Appeals.

    Issue(s)

    1. Whether Harold Lefft created a valid trust for the benefit of his children.

    2. Whether Geraldine Lefft was competent to testify regarding the alleged gift of paintings from Harold Lefft to his children under the dead man’s statute.

    3. Whether the children presented sufficient evidence to establish a valid gift of the paintings from Harold Lefft.

    Holding

    1. Yes, because the decedent, Harold Lefft, did create a valid trust.

    2. Yes, because Geraldine Lefft was not a person “from, through or under” whom the appellant would take the contested paintings if her testimony were credited.

    3. No, because even if Geraldine Lefft’s testimony were accepted, the children failed to establish a gift because of the absence of proof of delivery.

    Court’s Reasoning

    The Court of Appeals agreed with the lower court’s result but clarified its reasoning. It found that Harold Lefft did create a valid trust, but the beneficiaries were limited to Harold and Geraldine, not the children. The court noted that the trust agreement only expressed Harold’s intention to keep the artwork for his children but didn’t provide for any disposition to them.

    Regarding Geraldine’s competency to testify, the court held that the Surrogate erred in applying the dead man’s statute (CPLR 4519). The court reasoned that Geraldine’s waiver of her rights increased the children’s share of the estate, but they would take the paintings by gift from the decedent, not through the estate.

    However, the court ultimately affirmed the lower court’s decision because the children failed to prove a valid gift. The court emphasized that a gift must be established by clear and convincing proof, citing Hemmerich v Union Dime Sav. Inst., 205 NY 366, 369. Even if Geraldine’s testimony were accepted, the children failed to demonstrate delivery of the artwork, a necessary element for a valid gift, citing Matter of Szabo, 10 NY2d 94, 98. Without proof of delivery, the gift claim failed, regardless of intent.

  • In re Brown’s Estate, 274 N.Y. 10 (1937): State’s Power to Tax Property Held Out-of-State in Trust

    In re Brown’s Estate, 274 N.Y. 10 (1937)

    A state cannot tax intangible property held in trust out-of-state when the beneficiaries of the trust reside within the state, as such taxation exceeds the state’s jurisdictional limits and violates the Fourteenth Amendment.

    Summary

    This case addresses the limits of a state’s power to tax intangible property held in trust when the trustee and the property are located outside the state, but the beneficiaries reside within the state. The New York Court of Appeals held that New York State could not tax securities held by a trustee in another state, even though the beneficiaries of the trust resided in New York. The court reasoned that the power of a state to tax does not extend beyond its borders, and taxing property held and controlled outside the state’s jurisdiction violates the Fourteenth Amendment’s Due Process Clause.

    Facts

    The estate of a deceased New York resident included intangible property (securities) held in trust. The trustee was located outside of New York State. The beneficiaries of the trust resided in New York. New York sought to tax the intangible property held in trust.

    Procedural History

    The case originated in the Surrogate’s Court, which likely ruled in favor of the estate. The Appellate Division affirmed that ruling. The New York Court of Appeals then reviewed the case.

    Issue(s)

    Whether New York State has the power to tax intangible property held by a trustee located outside of New York, where the beneficiaries of the trust reside within New York.

    Holding

    No, because the state’s taxing power is restricted to its borders, and the imposition of a tax on securities held by a trustee in another state, where the beneficiaries have no present right to control or possess the securities, violates the Fourteenth Amendment.

    Court’s Reasoning

    The court determined that New York’s attempt to tax the intangible property exceeded its jurisdictional limits. It relied on the principle that a state’s taxing power cannot extend beyond its borders. The court distinguished the case from others where property within the state or being distributed into the state was taxed. The court cited Safe Deposit & Trust Co. v. Virginia, stating it had not been overruled by subsequent cases. The court emphasized that the issue wasn’t double taxation, but rather the state’s inability to levy taxes beyond its borders. The Court specifically noted that Guaranty Trust Co. v. Virginia recognized the authority of Safe Deposit & Trust Co. v. Virginia, stating the latter went “upon the theory that the taxing power of a state is restricted to her confines and may not be exercised in respect of subjects beyond them.” The beneficiaries’ lack of present control or possession over the securities was a key factor in the court’s decision, solidifying the principle that the tax was an unconstitutional overreach.

  • McGuire v. Hibbard, 5 N.Y.2d 41 (1958): Standing to Sue for Trust Mismanagement

    McGuire v. Hibbard, 5 N.Y.2d 41 (1958)

    A party who is not a beneficiary of a trust lacks standing to sue the trustee for mismanagement of that trust, even if the mismanagement allegedly affects the value of the party’s minority stock holding in a corporation controlled by the trust.

    Summary

    This case concerns a dispute between two testamentary trusts, the Vincent trust and the Walter trust, which each held 50% of the stock in two corporations. The Vincent trust sued the Walter trust, alleging that the Walter trust was not distributing enough of the corporate earnings as dividends. The New York Court of Appeals held that the Vincent trust, as a minority stockholder and not a beneficiary of the Walter trust, lacked standing to challenge the Walter trust’s management of the corporations or to enforce any fiduciary obligations owed to the Walter trust’s beneficiaries. The Court emphasized that absent a direct fiduciary duty owed to the plaintiff, a party cannot sue to enforce a trust or enjoin its breach.

    Facts

    Two brothers, Vincent and Walter, owned two corporations, each holding 50% of the stock. Vincent died first and placed his shares (minus one share given to Walter) into the Vincent trust. Walter subsequently died and placed his controlling shares into the Walter trust. The Vincent trust, representing its income beneficiaries, sued the Walter trust, alleging that it was improperly withholding corporate earnings by not declaring sufficient dividends. The Vincent trust argued that the Walter trust’s directors were bound by the law of trusts and estates to distribute income, rather than by the more lenient corporation laws.

    Procedural History

    The lower courts’ decisions are not specified in the Court of Appeals opinion, but the Court of Appeals affirmed the order being appealed. The Appellate Division expressly left open the possibility for the plaintiff to sue on a minority stockholder cause of action if the facts supported it, but the Court of Appeals did not address that issue.

    Issue(s)

    Whether the trustee of one testamentary trust (the Vincent trust), which holds a minority stock interest in corporations controlled by a second testamentary trust (the Walter trust), has standing to sue the trustee of the second trust for allegedly mismanaging the corporations by failing to declare sufficient dividends for the benefit of the first trust’s income beneficiaries.

    Holding

    No, because the defendant trustee of the Walter trust has no fiduciary duty to the Vincent trust or its beneficiaries. The Vincent trust is not a beneficiary of the Walter trust and therefore lacks standing to challenge its management.

    Court’s Reasoning

    The Court’s reasoning centered on the lack of a direct fiduciary relationship between the Walter trust and the Vincent trust’s beneficiaries. The court emphasized that the plaintiff was essentially suing as a minority stockholder, but disavowed that specific cause of action. The court stated that, assuming for the sake of argument that directors of wholly owned estate corporations are subject to the law of trusts and estates, only the income beneficiaries under the Walter trust would have standing to object to the accumulation of corporate income. The court reasoned that the Vincent trust, as a separate entity with its own beneficiaries, could not enforce fiduciary obligations arising from another trust. The court cited established precedent that “a person who might incidentally benefit from the performance of a trust but is not a beneficiary thereof cannot maintain a suit to enforce the trust or to enjoin a breach.” The court specifically declined to analyze prior Surrogate Court decisions (Matter of McLaughlin and Matter of Adler) or their subsequent reversals, finding that those issues were not presented in this case given the lack of standing. The key point was that the plaintiff’s grievance did not arise from a duty owed directly to them by the defendant as a trustee.

  • Matter of Estate of Stier, 271 N.Y. 186 (1936): Passive Trust Converts to Legal Life Estate

    Matter of Estate of Stier, 271 N.Y. 186 (1936)

    When a trust’s sole remaining trustee is also the sole beneficiary, the passive trust converts into a legal life estate, which is freely assignable, and the beneficiary is no longer subject to restrictions on alienation applicable to trust income.

    Summary

    Mathilda Stier’s estate was assessed additional income taxes due to her failure to report income from her father’s estate. The will established a trust with Mrs. Stier and her sister as trustees and beneficiaries for life, with the remainder to their children. After her sister’s death, Mrs. Stier renounced her interest in favor of her nephew. The Tax Commission argued this renunciation was invalid under Personal Property Law § 15, which prohibits the assignment of trust income. The Court of Appeals reversed, holding that upon her sister’s death, Mrs. Stier held a legal life estate, not a trust beneficiary interest, and could validly assign it. Thus, the income was taxable to her nephew, not to her.

    Facts

    Mrs. Stier’s father’s will created a trust, naming Mrs. Stier and her sister as trustees, with income payable to themselves for life, and the remainder to their children. Mrs. Stier’s sister died in 1935. In 1937, Mrs. Stier, then 77 and independently wealthy, executed a document renouncing her right to the trust income in favor of her nephew, Charles Fulton, her sister’s son. Subsequently, all trust income was paid to Fulton, and Mrs. Stier did not report it on her tax returns.

    Procedural History

    The State Tax Commission assessed additional income taxes against Mrs. Stier’s estate, claiming she improperly omitted taxable income. After a hearing, the Commission confirmed the assessment. The Appellate Division confirmed the Commission’s determination. The New York Court of Appeals granted leave to appeal.

    Issue(s)

    Whether, after the death of one of two co-trustees/beneficiaries, the surviving trustee/beneficiary holds an inalienable beneficial interest in a trust under Personal Property Law § 15, or a legally assignable life estate.

    Holding

    No, because when the surviving daughter became solely entitled to both possession and income, the trust relationship terminated, and she held a legal life estate that was freely assignable.

    Court’s Reasoning

    The court reasoned that when Mrs. Stier’s sister died, Mrs. Stier became the sole trustee and beneficiary. Citing the Statute of Uses codified in Real Property Law § 92, the court noted the historical purpose of abolishing passive trusts by merging legal title with beneficial interest. The court explained that while a trust is valid when the same individuals are both trustees and beneficiaries, that is only as long as there are multiple trustees or beneficiaries. “Every valid trust must have a trustee who is not the sole beneficiary.” Once Mrs. Stier became the sole trustee and beneficiary, the trust became passive, and she held a legal life estate. Therefore, Personal Property Law § 15, which prohibits the assignment of trust income by a beneficiary, did not apply. Mrs. Stier validly assigned her life estate to her nephew. The court rejected the Appellate Division’s view that the Supreme Court should have appointed a new trustee to fill a “vacancy,” stating that the sister’s death ended the trust relationship. The court quoted from 1 Scott on Trusts, noting the New York rule that the trust converts to a legal life estate when the sole trustee is also the sole beneficiary. Therefore, the income was taxable to her nephew, not to her, and the tax assessment was incorrect.

  • Matter of Forde, 286 N.Y. 127 (1941): Establishing a Trust from Ambiguous Will Language

    Matter of Forde, 286 N.Y. 127 (1941)

    A trust can be established even without explicit trust language if the will, considered in its entirety, indicates the testator’s intent to create one, considering the will’s language, relevant facts, and circumstances surrounding its creation.

    Summary

    This case concerns the interpretation of a holographic will where the testatrix bequeathed her estate to her sister “for her maintenance, as long as she lives,” with instructions for a named individual to administer the estate according to his judgment. The court was asked to determine whether this language created an outright gift to the sister or established a trust. The majority affirmed the lower court’s ruling that it was an outright gift. However, the dissent argued that the language, specifically the direction for administration, indicated an intent to create a trust for the sister’s benefit during her lifetime, with the remainder passing to other heirs.

    Facts

    Eleanor Forde executed a holographic will stating: “I, Eleanor Forde… do hereby bequeath all my real and personal estate… to my sister, Emily Forde… for her maintenance, as long as she lives, the estate to be administered by Alfred Barmore Maclay… according to his judgment.” Eleanor appointed Maclay as executor. At the time of the will’s creation, Emily Forde was approximately 68-69 years old. The estate was valued at nearly $35,000. Eleanor had provided financial support to Emily in the past.

    Procedural History

    The executor petitioned for probate of the will and sought a construction to determine if the will intended an outright gift or a life estate trust for Eleanor’s sister. The Surrogate’s Court construed the will as an outright gift. The Appellate Division affirmed. The New York Court of Appeals granted leave to appeal.

    Issue(s)

    Whether the language of the will, bequeathing the estate to the testatrix’s sister “for her maintenance, as long as she lives,” and directing administration by a named individual, created an outright gift to the sister or established a trust for her benefit during her lifetime.

    Holding

    No, the will created an outright gift to the sister because the language was not ambiguous and did not clearly demonstrate an intent to establish a trust. The phrase indicating it was for “maintenance” did not impose conditions on the gift. (Majority view. The dissent would have reversed.)

    Court’s Reasoning

    The majority of the Court of Appeals upheld the lower courts’ decisions, finding no ambiguity in the will’s language that would indicate an intent to create a trust. The dissent, however, emphasized the phrase “for her maintenance, as long as she lives,” arguing that it stated the intended use of the funds and the term of such use. Crucially, the dissent highlighted the direction for Maclay to administer the estate “according to his judgment,” arguing that this implied management beyond the period of estate administration and indicated an intent to create a trust. The dissent quoted St. Joseph’s Hospital v. Bennett, 281 N.Y. 115, 118, 119 stating “The gift and the statement of its purpose cannot be separated, one from the other * * *. In this case the later words are of equal force with the former and are free from ambiguity.” The dissent also noted that the testatrix’s failure to explicitly name the nephews and grandniece as remaindermen did not necessarily indicate an intent to disinherit them, as she likely understood that inheritance laws would govern the distribution of the remainder after the sister’s death. The dissent relied on Matter of McClure, 138 N.Y. 238. The differing interpretations underscore the challenges in discerning testamentary intent from ambiguous language and the importance of considering the will as a whole, along with surrounding circumstances, to determine the testator’s true wishes.

  • Farmers’ Loan & Trust Co. v. Clowes, 3 N.Y. 470 (1850): Implied Corporate Powers

    Farmers’ Loan & Trust Co. v. Clowes, 3 N.Y. 470 (1850)

    A corporation possesses implied powers to engage in activities necessary or incidental to achieving its express, authorized purposes, even if those activities are not explicitly mentioned in its charter.

    Summary

    This case addresses the scope of a corporation’s implied powers. The Farmers’ Loan and Trust Company, originally chartered with express lending powers, continued to make loans after its explicit lending authority expired. The defendants, who had taken out a mortgage with the company, argued the loan was invalid because the company lacked the explicit power to make it. The court held that even though the company’s express power to make loans had expired, it retained the implied power to do so, as lending was incidental and necessary to its ongoing business of managing trusts and annuities. The court emphasized that preventing the company from making loans would hinder its ability to fulfill its trust obligations and manage its assets prudently. Therefore, the mortgage was valid.

    Facts

    The Farmers’ Fire Insurance and Loan Company was incorporated in 1822 with the power to make loans on bonds and mortgages.
    The company’s charter was initially limited to 15 years, except for insurance on lives and granting annuities.
    A subsequent act authorized the company to act as a trustee without time limitation.
    In 1836, the company’s name was changed to The Farmers’ Loan and Trust Company.
    After the initial 15-year period, the company continued to make loans.
    The defendants, Clowes, obtained a loan from the company secured by a mortgage.

    Procedural History

    The Farmers’ Loan and Trust Company sued to foreclose on a mortgage executed by the defendants.
    The defendants argued the loan was void because the company lacked the power to make it.
    The Supreme Court ruled in favor of the plaintiff, upholding the validity of the mortgage.
    The defendants appealed to the Court of Appeals of New York.

    Issue(s)

    Whether a corporation, whose express power to make loans has expired, retains the implied power to do so when such activity is incidental and necessary to its other authorized business purposes, such as managing trusts and annuities.

    Holding

    Yes, because the power to make loans is incidental and necessary to the corporation’s authorized business purposes, such as managing trusts and annuities, even after the expiration of its explicit lending power.

    Court’s Reasoning

    The court reasoned that although the company’s express power to make loans had expired after fifteen years, the company retained the implied power to do so because it was necessary for the execution of its other powers, particularly its trust business. The court stated that it could not have been contemplated by the legislature that their capital should remain unproductive in their vaults, and especially not that the funds held by them in trust should remain uninvested. It was their very business to see that they were safely and properly invested, as well for the security of the beneficiaries, as for their own protection. Allowing the company to make loans was essential to fulfilling its duties as a trustee and managing its assets prudently. The court distinguished this case from situations where a corporation acts in direct contravention of its charter. In this instance, the power to loan money was a proper and necessary means of enabling them to effect the purposes for which they were incorporated and especially to fulfill their duties and obligations in respect to the trust powers conferred by their charter.