(1924; C. C. A. 3d) 2 F. (2d) 322 (later appeal in (1926; C. C. A. 3d) 10 F. (2d) 504).

In Continental Supply Co. v. Robertson (1924) 166 Ark. 52, 265 S. W. 659, the trustees of a business trust which had been engaged in drilling oil wells. on leased lands, and had done business under a declaration vesting in them absolute authority over the trust business and property, were held on the facts, in view of their having wound up its affairs and adjusted their accounts, to be released from liability to a creditor who neglected to file his claim within a reasonable time.

In Gray v. Lincoln Housing Trust (1924) 229 Mich. 441, 201 N. W. 489, where the defendant did business under a plan somewhat similar to that of building and loan associations, and, under a contract with plaintiff to lend him money, took a mortgage, but failed to advance any money, plaintiff was held to be entitled to have the mortgage canceled, as against the receiver of the trust.

As to the right of a trustee who becomes liable to a creditor, to contribution from the shareholders, see Mims v. Stephens County-Ranger Oil Co. (1924) Tex. Civ. App. —, 268 S. W. 1014, supra, II. c.

In Green v. La Rue Oil Asso. (1925)

Tex. Civ. App. -, 272 S. W. 623, where some of the shareholders had ceased to belong to the association and the issue was as to whether a certain peremptory instruction was properly given, the court said that, if the uncontroverted evidence had failed to show that certain of the defendants, sued as members of the association, were shareholders, an instruction in their favor would be authorized,— but considered that the instruction which was given against intervening creditors, and in favor of the association and certain defendants who appeared to be shareholders, was not authorized.

V. Power of officers or shareholders to sell trust lands.

(Supplementing annotations in 7 7 A.L.R. 629, and 31 A.L.R. 865.)

Although the question of power was

not directly involved, attention is called to Wright v. Webb (1925) 169 Ark. 1145, 278 S. W. 355, where the court overruled the contention that the trustees of a common-law trust had violated their legal duty to the beneficiaries by selling out the property and business, it having been shown that they sold merely their interest.

V. [a] [New] Power of trustees to maintain suit in own name.

(Supplementing annotation in 31 A.L.R. 865.)

Conceding that the common-law trust in question had no standing in law as a legal entity, its trustees were held in Denny v. Cascade Platinum Co. (1925) 133 Wash. 436, 232 Pac. 409, to be entitled to maintain a suit to quiet title, where former trustees, who had ceased to have any actual interest, had purported to convey the property to a corporation.

The power of the trustees of an unincorporated trust owning an oil lease to maintain suit to enjoin the drilling a well there was recognized in Parker v. Mona-Marie Trust (1925) Tex. Civ. App., 278 S. W. 321.

V. [b] [New] Power of beneficiaries to maintain suit.

(Supplementing annotations in 31 A.L.R. 865, and 35 A.L.R. 505.)

As to the right of investors in a trust to compel the examination of its records, even if the trust instrument did not concede the right, see United States v. Invader Oil Corp. (1925; D. C.) 5 F. (2d) 715, where the court observed that, except that a single trustee was vested with great powers, and was made practically immune from any right in the investors to have his disposition of their property questioned during a term of twenty years, the organizations involved were in their nature commercial associations.

In holding that the subscriber to stock in an association which was entirely controlled by a single trustee, who had no intention of actually transacting business, but immediately. transferred all the association's assets to a corporation, without any consideration except an agreement to issue

stock, could recover from the corporation the portion of his subscription which remained in the hands of the corporation, the trustee having taken a large percentage of it from the association for his commission in selling the stock, the court in Cattle Raisers' Loan Co. v. Sutton (1925) Tex. Civ. App., 271 S. W. 233, characterized the transaction as a fraudulent scheme to promote and sell capital stock of a common-law trust association, and said: "It is quite apparent that Vernor, the trustee, was the common-law trust, for it had no other existence than the life Vernor breathed into it, which was to catch subscribers, get their money, pay himself large sums of money, transfer to another assetless corporation, and get from under his legal obligation, then fly to other fields of adventure, leaving appellant company, who took the property with full notice of all the facts that none of the stockholders should be held personally liable for any of its debts, but must look to the assets of the trust fund for protection. So, then, appellant took those assets with full notice of all the facts, burdened with all obligations to discharge the trust obligation out of the assets it took over, just as the trust company was obligated to do."

Tex.

A preferred stockholder in a trust Iwas held to be entitled to rescind his subscription contract for fraud, in Wineinger v. Farmers' & Stockmen's Loan & Invest. Asso. (1925) Civ. App. —, 278 S. W. 932, the court observing that "the doctrine of delectus personæ has no application to joint stock companies and business trusts."

A finding that the promoters and trustees of an enterprise were not guilty of fraud upon purchasers of stock, so as to enable the latter to rescind their purchases, was held to be warranted in Palmer v. Taylor (1925) 168 Ark. 127, 269 S. W. 996, where the purchasers failed to prove that certain alleged misrepresentations and misconduct amounted to fraud, and the promoters showed that they made an earnest effort to launch the enterprise and acted in good faith. In regard to a provision of the declaration of trust, that "the shareholders shall not have

the right to call for a partition or division or a dissolution of the trust or an accounting," the court said that this did not give the trustees the right to convert or otherwise misappropriate the assets of the concern, or to have immunity from accounting therefor, but that its fair and proper construction was that no suit for partition or division, or for an accounting, should operate to dissolve the trust. And the court overruled the contention that a provision allowing the trustees to expend 30 per cent of the proceeds of all stock for commissions in selling stock and for promotion purposes necessarily operated to impair the capital to such an extent as to render it fraudulent.

One who in good faith promoted a "Co-operative Garage and Delivery," and was one of its trustees, was held in McCrea v. Day (1925) 113 Neb. 538, 204 N. W. 56, not to be liable to subscribers for money paid for shares or "certificates of interest," where he did not profit from the scheme, which quickly collapsed after two of the trucks got stuck in a muddy country road. The court held, however, that certain of the subscribers were entitled to share in the proceeds of the sale of property which had been purchased for a terminal.

V. [c] [New] Right to bring suit in firm name.

(Supplementing annotation in 31 A.L.R. 866.)

The right of trustees of a commonlaw trust to maintain suit in the collective trade name which they had adopted, and had used in transacting their business, without coupling their individual names, was expressly upheld in General American Oil Co. v. Wagoner Oil & Gas Co. (1925) 118 Okla. 183, 247 Pac. 99.

See Haines v. Bankers' Petroleum & Ref. Co. (1925) Tex. Civ. App. 273 S. W. 940, infra, VI.

In Forgan v. Mackie (1925) 232 Mich. 476, 205 N. W. 600, where a conditional vendee was sued by the purchaser of the conditional sale agreement, plaintiff entitling itself as "Commercial Acceptance Trust, Trustee under the Laws of the State of

Massachusetts," and it was shown that the trust regularly engaged in the business of purchasing such contracts, the court said that "this voluntary association, organized in Boston, under written articles of agreement and declaration of trust [some of the provisions being noted], was admittedly what is known as a Massachusetts common-law trust; that state having enacted legislation expressly pertaining to and recognizing such legal entities;" and held that the case automatically ended by reason of the trust subsequently withdrawing and discontinuing, when the lower court permitted to be joined as parties plaintiff several named trustees who were doing business under that firm name; since "their certificate of doing business under an assumed name could not transfer to them any property or property rights of the trust, or affect its organization and existence as a legal entity."

V. [d] [New] Defense of suits against business trusts.

(Supplementing annotation in 31 A.L.R. 866.)

In WEBER ENGINE Co. v. ALTER (reported herewith) ante, 158, where defendants were sued as partners, it will be noted that the court overruled their contention that, since they had organized themselves as an association, under the common law, they were not amenable to the requirements of the corporation law, the court taking the position that they could not escape personal liability by organizing as they did, without complying with all the requirements of the corporation law.

In Bouchard v. First People's Trust (1925) Mass. -, 148 N. E. 895, supra, III. b, 1, a trust was held to have been improperly sued as an "association," within the meaning of Gen. Laws, chap. 182, § 6, permitting associations to be sued as such, but it was held that the trustees might be substituted as defendants.

In Austin v. Parker (1925) 317 Ill. 348, 148 N. E. 19, supra, II. c, the trustees of a business trust, sued as such for services rendered under an agreement with but one of them, success

fully defended the suit upon the

ground that that trustee was alone personally liable.

And, in holding that a business trust could not be sued as such, it was said in Guthmann v. Adco Dry Storage Battery Co. (1924) 232 Ill. App. 327, that neither a natural nor an artificial person had been made a party defendant to the suit.

In Gordon Campbell Petroleum Co. v. Gordon Campbell-Kevin Syndicate (1926) Mont. -, 242 Pac. 540, a trustee of a syndicate, a business trust, was held to be precluded from enforcing a claim against it, where the declaration of trust provided that at least two of the trustees must concur in order to render valid any act done by or in behalf of the trust, and but one trustee other than the claimant himself, who was held to have been disqualified to pass upon his own claim (under a general statute prohibiting a trustee from taking part in any transaction concerning the trust in which he had an interest adverse to that of his beneficiary, without the latter's permission), was present at a meeting when the claim was presented, and the account was not shown to have been subsequently ratified by the trustees other than the claimant.

VI. Liability of trustees for negligence. (Supplementing annotations in 7 A.L.R. 629, and 31 A.L.R. 866.)

A finding was held to be warranted in Haines v. Bankers' Petroleum & Ref. Co. (1925) Tex. Civ. App. —, 273 S. W. 940, that one to whom the sole control of an association's affairs had been intrusted was liable to it for negligence and bad faith upon his part, based upon transactions with another concern in which he was interested, which resulted in the association becoming insolvent, and that it was not necessary that it file proceedings for an accounting.

In Marchulonis v. Adams (1924) 97 W. Va. 517, 125 S. E. 340, where trustees operating a mine for a company were sued for a personal injury to an infant, the court held that the company was a partnership rather than a trust, and that whether the trustees were shareholders (and so liable for negligence), or not, was a matter of proof. E. W. H.