IN THE MATTER OF PAYING INTEREST TO INTENDED BENEFICIARY ON BONDS HELD IN TRUST, UPON DEATH OF THE TRUSTEE, OR OF REQUIRING APPOINTMENT OF NEW TRUSTEE.-BOND-TRUST CASE.

1. If A hold a registered Government bond in trust for B, the interest on such bond cannot be paid to B upon the death of A.

2. In such case a successor in the trust should be appointed by the proper court. 3. It is competent to make a declaration of trust in the bond, or in a separate paper, by which the legal title and right to the payment of interest shall vest in the cestui que trust upon the death of the trustee.

4. Neither principal nor interest can be paid to a minor having the legal title to a bond. Payment should be made to a guardian.

5. It is competent, in creating a trust in a bond, to name or provide a mode of designating a successor in the trust in the event of the death of the trustee.

A gentleman in Philadelphia, who purposes to make an investment in bonds of the United States, and desires to obviate any difficulty which might arise in the future as to the payment of interest thereon to his intended beneficiary, asks, for his guidance, the decision of the Treasury Department on the following question, namely:

If I. N. purchase United States bonds and have them registered "I. N., trustee for A. N.," (his daughter,) to whom he wishes to give them on his death, will the interest be paid directly to A. N., on the death of I. N., without requiring any further proceedings than evidence of the death?

The inquiry is referred to the First Comptroller.

OPINION BY WILLIAM LAWRENCE, First Comptroller:

In the case stated, I. N. would become a trustee for A. N. (2 Watson, Compend. Eq., 873; Sayre vs. Hughes, L. R., 5 Eq., 376; Re De Visme, 2 D. J. & S., 170.) Upon the death of I. N. there would be a vacancy in the office of trustee, and no payment of interest could be made until the court having jurisdiction had appointed a new trustee; or, by decree, terminated the trust. (Adams, Equity, 35; Snell, Princip. Eq., 335.)

It is assumed that the trustee holds, and has declared a purpose to hold, in special, as distinguished from simple, trust. (2 Watson, Compend. Eq., 859.)

It is a question how far the executors or administrators of a deceased trustee can execute the trust. (Perry, Trusts, 2d ed., sec. 343; Lewin, Trusts, 205; 2 Story, Eq. Jur., 11th ed., 1060, n.; 4 Kent, Com., 311; Hill, Trustees, 184, 326; 1 Sugd., Powers, 6th ed., 244; 1 Jarm., Wills,

638; Marlow vs. Smith, 2 P. Wms., 201; 16 Ves., 231; Lomax, Ex. & Adm., Pt. 3, B. 1, ch. 3.)

The legal representative of a sole deceased trustee is charged with a duty as custodian until a successor in the trust is appointed and assumes the trust. (Hill, Trustees, 326; 1 Sugd. V. & P., 9th ed., 519.) He becomes a trustee de facto. (Watson, Compend. Eq., ch. 4, "Trusts;” Rackham vs. Siddall, 16 Sim., 297; 1 Mac. & G., 607; Hennessey vs. Bray, 33 Beav., 96; Knatchbull vs. Fearnhead, 3 M. & C., 122; Att'yGen. vs. Lady Downing, Wilm., 21; Amb., 550; Att'y-Gen. vs. Stephens, 3 M. & K., 347; Pitt vs. Pelham, 2 Fr., 134.)

The proper course is to have a trustee appointed. (Perry, Trusts, sec. 344; Hill, Trustees, 175, 190; Hibbard vs. Lamb, Ambl., 309; Hewett vs. Hewett, 2 Eden, 332; Amb., 208; Att'y-Gen. vs. Clark, 1 Beav., 467; Drayson vs. Pocock, 4 Sim., 283; Finlay vs. Howard, 2 Dr. & W., 490; Devey vs. Pace, Taml., 77; Blizzard vs. Filler, 20 Ohio, 480; Dunscomb vs. Dunscomb, 2 Harr. & Mumf., 11; Ridgley vs. Carey, 4 Harr. & McHenry, 167.)

This is on the assumption that there is no written declaration of the purpose of the trust beyond that stated in the bonds, as indicated in the question submitted for decision.

It would be competent for I. N. to declare in the bonds, or in a separate written declaration of trust,* duly executed and acknowledged, that upon his death the absolute title in the bonds, with a right to the interest thereon, should vest in the cestui que trust, A. N. Trust estates are governed by the same rules of descent and devolution as legal estates, whatever the nature of the property may be. (Trash vs. Wood, .4 M. & C., 324.) In the case above stated the legal and equitable estate would both vest in A. N., and the equitable would merge in the legal estate. (Wade vs. Paget, 1 B. C. C., 363; Philips vs. Brydges, 3 Ves., 126; 4 Kent, Com., 311; 11 Paige, Ch., 314; Hill, Trustees, 326) If A. N. should be a minor when the entire estate vests in her, interest on her bonds could be paid until the age of majority to her guardian only. (Waugh vs. Wyche, 23 L. J. Ch., 823; Furman vs.

*The execution of a separate declaration of trust should conform to that for an assignment of a bond; for which see regulations relating to Government bonds in Appendix to 1 Lawrence, Compt. Dec., 566. For form of declaration of trust authorizing the cestui que trust to substitute new trustees in case of death of trustees or other cause, &c., see Hill, Trustees, 177 n.

It is said in Watson's Compendium of Equity (vol. 2, p. 860) that in England joint stock companies and the Bank of England recognize only the legal title; that is, the title of those whose names are entered in their books as the proprietors of shares or stock. But the court of chancery has jurisdiction to compel, if necessary, such companies or the bank to give effect to the equitable title. (See, also, Pearson vs. Bank of England, 2 B. C. C., 529; Austin vs. Same, 8 Ves., 522; Lowry vs. Commercial and Farmers' Bank, Tan. Dec., 310.)

Coe, 1 Caines' Cas., 96; Sparhawk vs. Buell, 9 Vt., 41; Dagley vs. Tolferry, 1 P. Wms., 285; Phillips vs. Paget, 2 Atk., 80; Davies vs. Austen, 3 Bro. Ch., 178; Lee vs. Brown, 1 Ves., 369; Overton vs. Bannister, 3 Hare, 503; Cory vs. Gerteken, 2 Mad., 40; Hoyt vs. Hilton, 2 Edw. Ch., 202; 2 Perry, Trusts, secs. 624, 921.)

The donor, I. N., could name in his declaration of trust a person to succeed himself; and, in the event of his death, to act as trustee until the cestui que trust should reach the age of majority, and could declare that the absolute title should then vest in her. (Hill, Trustees, 175; Lindlow vs. Fleetwood, 6 Sim., 152; Lampayo vs. Gould, 12 Sim., 426.) The author of the trust is, comparatively speaking, unfettered in his selection of trustees. (Wilding vs. Bolder, 21 Beav., 222.)

A trust may be declared at an end, and the trustee discharged, by consent of the cestuis que trust, if they are sui juris; or without such consent, if the purposes of the trust be attained or terminated. (Perry, Trusts, 2d ed., secs. 920, 921.)

The inquiry presented is answered in the negative.

TREASURY DEPARTMENT,

First Comptroller's Office, April 19, 1881.

IN THE MATTER OF THE ASSIGNMENT OF QUARTERMASTERS' VOUCHERS.-DANA'S CASE.

1. Prior to July, 1878, quartermasters' vouchers duly receipted in blank by the claimants as paid, were, in practice in the Treasury Department, treated as assignable, and as passing by delivery to the holder, who was deemed primâ facie entitled to Treasury drafts in payment thereof.

2. This practice was in violation of section 3477 of the Revised Statutes, and of the general policy of the law.

3. The Treasurer cannot lawfully transmit to purchasers of claims against the United States, merely because of such purchases, drafts payable to the original claim

ants.

4. Power of attorney authorizing parties to receive drafts will, in proper cases, be respected.

In October, 1879, H. L. Dana and six other persons furnished the Government transportation for Indian prisoners in Montana, for which service they respectively received duly certified vouchers from an assistant quartermaster of the Army.

For the purpose of making sale of these vouchers, the parties in

whose favor they were respectively issued, signed a blank receipt, acknowledging payment thereof, and indorsed the vouchers in blank.*

Prior to July, 1878, such vouchers, so receipted and indorsed, were treated as negotiable; possession of them was deemed primâ facie evidence of ownership; and they were, even without the blank indorsement, allowed by the accounting officers in favor of the holders, and so paid by the proper disbursing officers. (Lawrence and Crowell's case, 8 Ct. Cls., 252; Heathfield's case, Id., 213.)

Since the decision in U. S. vs. Gillis, 95 U. S. Reports, 407, made in 1878, the practice has been to issue drafts in payment of such vouchers to the original claimants, and to transmit or deliver them to the parties. who purchased the vouchers.

On February 21, 1881, Treasury drafts Nos. 12868 to 12873, inclusive, and No. 12878, were issued in favor of H. L. Dana and six other claimants, who furnished the transportation referred to in 1879; and the drafts were sent through the Quartermaster's department at Fort Ellis, Montana, to Story & Willson, of Bozeman, Montana, the purchasers of the vouchers.

On March 9, 1881, this firm addressed a letter to the Treasurer of the United States, saying that it would be a very difficult matter to find

*One of the vouchers is as follows:

FORM NO. 13.-VOUCHER TO ABSTRACT B.

To H. L. DANA,

THE UNITED STATES,

Place and date, For hire of wagon and team for twenty-six (26) days, at $6 per day.

Fort Ellis, M.

T.,
21, 1879.

October

Sept. 19 to Oct. 14, 1879, both dates inclusive.
Hired in compliance with special order No. 196, dated Head-
quarters, Fort Ellis, M. T., September 18, 1879.

Copy hereto attached.

One copy retained in Indian Office.
[Stamp.]

E. SUBRY,

Examiner.

One hundred and fifty-six dollars, ($156.00.)

I certify that the above account is correct and just; that
the services were rendered as stated; that they were neces-
sary for the public service, and are borne on my report of
persons, &c., for the month of October, 1879.

JAS. N. ALLISON,
Lieut. 2d Cavalry, A. A. Q. M., Ú. S. A.

DR.

$156 00

"H. L. DANA,

STORY & WILLSON."

some of the original claimants, and expressing a fear that it "will be impossible" to find others; hence that the payees' indorsement of the drafts could not be obtained; and asking whether they might return to the Treasurer such of the drafts as they "cannot get properly indorsed, and have them exchanged for new ones," payable to their own order.

The Treasurer, on the 21st of March, 1881, referred this letter to the Second Auditor, who, on the 9th of April, referred it to the Secretary of the Treasury; the latter, on the 12th of April, referred it to the First Comptroller for decision.

DECISION BY WILLIAM LAWRENCE, First Comptroller:

The statute is so explicit in prohibiting the assignment of "any claim upon the United States, or any part or share thereof, or interest therein," until after the "issuing of a warrant for the payment thereof," that no discretion is left to executive officers to give the relief asked for in this case. (Rev. Stats., 3477; see also sec. 1778.) The policy of restraining or forbidding assignments pervades many provisions in the Revised Statues. (Secs. 1291, 1576, 2106, 2263, 2411, 2436, 3963, 4536, 4643, 4745.)

The Supreme Court has decided in emphatic terms that the words of the statute, making "absolutely null and void" all assignments of claims, "embrace every claim against the United States, however arising, of whatever nature it may be, and wherever and whenever presented." (U. S. vs. Gillis, 95 U. S., 413; see U. S. vs. Robeson, 9 Pet., 319; Kendall's case, 7 Wall., 113; s. c., 7 Ct. Cls., 33; Safford's case, 1 Lawrence, Compt. Dec., 287; McKnight vs. U. S., 98 U. S., 186.) It may be a hardship to the parties now asking relief that it cannot be granted; but executive officers cannot dispense with statutes or refuse to carry out their purpose. Congress alone can afford relief.

It should be understood that the Treasurer cannot lawfully transmit to purchasers of claims against the United States, merely because of such purchases, drafts payable to the original claimants. Powers of attorney authorizing parties to receive drafts will, in proper cases, be respected. (McAllister's case, ante, 167.) The application of Story & Willson must be refused.

TREASURY DEPARTMENT,

First Comptroller's Office, April 20, 1881.