Involuntary trust resulting from negligence, etc. Rowcliffe, 2 Phil., 382; 3 Hare, 304; see Anderson vs. SEC. 2224. One who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act, is, unless he has some other and better right thereto, an involuntary trustee of the thing gained, for the benefit of the person who would otherwise have had it. N. Y. C. C., Sec. 1176. Trustee's obligation to good faith. Trustee not to use prop erty for his own profit. Certain transactions forbidden. ARTICLE II. OBLIGATIONS OF TRUSTEES. SECTION 2228. Trustee's obligation to good faith. 2229. Trustee not to use property for his own profit. 2230. Certain transactions forbidden. 2231. Trustee's influence not to be used for his advantage. 2232. Trustee not to assume a trust adverse to interest of benefi SEC. 2228. In all matters connected with his trust, a trustee is bound to act in the highest good faith toward his beneficiary, and may not obtain any advantage therein over the latter, by the slightest misrepresentation, concealment, threat or adverse pressure of any kind. N. Y. C. C., Sec. 1177. SEC. 2229. A trustee may not use or deal with the any other purpose trust property for his own profit, or for unconnected with the trust, in any manner. N. Y. C. C., Sec. 1178. SEC. 2230. Neither a trustee nor any of his agents may take part in any transaction concerning the trust in which he, or any one for whom he acts as agent, bas an interest, present or contingent, adverse to that of his beneficiary, except as follows: 1. When the beneficiary, having capacity to contract, with a full knowledge of the motives of the trustee, and of all other facts concerning the transaction which might affect his own decision, and without the use of any influence on the part of the trustee, permits him to do so. 2. When, the beneficiary not having capacity to contract, the proper Court, upon the like information of the facts, grants the like permission; or, 3. When, some of the beneficiaries having capacity to contract, and some not having it, the former grant permission for themselves, and the proper Court for the latter, in the manner above prescribed. N. Y. C. C., Sec. 1179. Trustee's influence not SEC. 2231. A trustee may not use the influence which his position gives him to obtain any advantage from his to be used beneficiary. N. Y. C. C., Sec. 1180. SEO. 2232. No trustee, so long as he remains in the trust, may undertake another trust adverse in its nature to the interest of his beneficiary in the subject of the trust, without the consent of the latter. N. Y. C. C., Sec. 1181. for his advantage. adverse interest. SEC. 2233. If a trustee acquires any interest, or be- To disclose comes charged with any duty, adverse to the interest of his beneficiary in the subject of the trust, he must immediately inform the latter thereof, and may be at once removed. N. Y. C. C., Sec. 1182. SEC. 2234. Every violation of the provisions of the preceding sections of this article is a fraud against the beneficiary of a trust. N. Y. C. C., Sec. 1183. Trustee guilty of fraud, when. tees. SEC. 2235. All transactions between a trustee and his Presumption beneficiary, during the existence of the trust, or while against trus the influence acquired by the trustee remains, by which he obtains any advantage from his beneficiary, are presumed to be entered into by the latter without sufficient consideration, and under undue influence. N. Y. C. C., Sec. 1184. SEC. 2236. A trustee who wilfully and unnecessarily mingles the trust property with his own, so as to consti Trustee mingling trust property with his own. Measure of liability for breach of trust. Same. Co-trustees, how far liable for each other. tute himself in appearance its absolute owner, is liable for its safety in all events. N. Y. C. C., Sec. 1185. SEC. 2237. A trustee who uses or disposes of the trust property, contrary to Sec. 2229, may, at the option of the beneficiary, be required to account for all profits so made, or to pay the value of its use, and, if he has disposed thereof, to replace it, with its fruits, or to account for its proceeds, with interest. N. Y. C. C., Sec. 1186. SEC. 2238. A trustee who uses or disposes of the trust property in any manner not authorized by the trust, but in good faith, and with intent to serve the interests of the beneficiary, is liable only to make good whatever is lost to the beneficiary by his error. N. Y. C. C., Sec. 1187. SEC. 2239. A trustee is responsible for the wrongful acts of a co-trustee, to which he consented, or which by his negligence he enabled the latter to commit; but for no others. N. Y. C. C., Sec. 1188. Third person, when involuntary trustee. When third ARTICLE III. OBLIGATIONS OF THIRD PERSONS. SECTION 2243. Third person, when involuntary trustee. 2244. When third person must see to application of trust property. SEC. 2243. Every one to whom property is transferred in violation of a trust, holds the same as an involuntary trustee under such trust, unless he purchased it in good faith and for a valuable consideration. SEC. 2244. N. Y. C. C., Sec. 1189. One who actually and in good faith trans see to appli- fers any money or other property to a trustee, as such, is person must cation of trust prop. erty. not bound to see to the application thereof, and his rights can in no way be prejudiced by a misapplication thereof by the trustee. Other persons must, at their peril, see to the proper application of money or other property paid or delivered by them. N. Y. C. C., Sec. 1190. CHAPTER II. TRUSTS FOR THE BENEFIT OF THIRD PERSONS. ARTICLE I. NATURE AND CREATION OF THE TRUST. II. OBLIGATIONS OF TRUSTEES. III. POWERS OF TRUSTEES. IV. RIGHTS OF TRUSTEES. V. TERMINATION OF THE TRUST. VI. SUCCESSION OR APPOINTMENT OF NEW TRUSTEES. ARTICLE I. NATURE AND CREATION OF THE TRUST. SECTION 2250. Who are trustees within scope of this chapter. 2251. Creation of trust. 2252. Trustee appointed by Court. 2253. Declaration of trust. 2254. Same. SEC. 2250. The provisions of this chapter apply only to express trusts, created for the benefit of another than the trustor, and in which the title to the trust property is vested in the trustee; not including, however, those of executors, administrators and guardians, as such. N. Y. C. C., Sec. 1191. who are within scope chapter. trustees of this of trust. SEC. 2251 The mutual consent of a trustor and trustee Creation creates a trust, of which the beneficiary may take advantage at any time prior to its rescission. N. Y. C. C., Sec. 1192. SEC. 2252. When a trustee is appointed by a Court cr public officer, as such, such Court or officer is the trustor, within the meaning of the last section. N. Y. C. C., Sec. 1193. Trustee ap- pointed by of trust. SEC. 2253. The nature, extent and object of a trust Declaration are expressed in the declaration of trust. N. Y. C. C., Sec. 1194. SEC. 2254. All declarations of a trustor to his trus- Same. tees, in relation to the trust, before its acceptance by the trustees, or any of them, are to be deemed part of the declaration of the trust, except that when a declaration of trust is made in writing, all previous declarations by the same trustor are merged therein. N. Y. C. C., Sec. 1195. ARTICLE II. Trustee must obey declaration of trust. Degree of care and OBLIGATIONS OF TRUSTEES. SECTION 2258. Trustees must obey declaration of trust. 2259. Degree of care and diligence in execution of trust. 2260. Duty of trustee as to appointment of successor. 2261. Investment of money by trustee. 2262. Interest, simple or compound, on omission to invest trust moneys. 2263. Purchase by trustee of claims against trust fund. SEC. 2258. A trustee must fulfil the purpose of the trust, as declared at its creation, and must follow all the directions of the trustor given at that time, except as modified by the consent of all parties interested, in the same manner, and to the same extent, as an employé. N. Y. C. C., Sec. 1196. SEC. 2259. A trustee, whether he receives any comdiligence in pensation or not, must use at least ordinary care and diligence in the execution of his trust. execution of trust. Duty of trustee as to of successor. N. Y. C. C., Sec. 1197. SEC. 2260. If a trustee procures or assents to his disappointment charge from his office, before his trust is fully executed, he must use at least ordinary care and diligence to secure the appointment of a trustworthy successor before accepting his own fiual discharge. Investment of money by trustee. This provision is new, and is intended to protect beneficiaries from a hasty resort to the Courts in order to shake off the responsibility of a trust; a proceeding by which they have been sometimes irremediably injured; an insolvent and reckless trustee having been appointed in place of an indolent but responsible one. N. Y. C. C., Sec. 1198. SEC. 2261. A trustee must invest money received by him under the trust, as fast as he collects a sufficient amount, in such manner as to afford reasonable security and interest for the same. N. Y. C. C., Sec. 1199. |