erty was held by trustees with powers defined by an instrument which appears in the record. Such an organization is sometimes called a Massachusetts trust because it is in common and familiar use in that state. It seems to be claimed by the plaintiff that this was in a way fraudulent per se; that the representations that it was a company were not supported by the fact that it was such as it was. There is no objection to the use of such an organization, nor is it per se fraudulent or deceitful. There is no reason why stock in such an organization should not be as valuable as in a corporation, nor why it should not pay as surely."

In Wimer & Co. v. Downs (1925) 77 Colo. 377, 237 Pac. 155, the court held that the declaration of trust of a certain mining concern did not expressly grant to the managers or trustees the right to control the sale of stock, or the power to refuse to make a transfer, and that, as the ownership or transfer of the stock did not concern them, they could not interfere with its transfer.

c. Provisions limiting liability. (Supplementing annotations in 7 A.L.R. 617; 10 A.L.R. 887; 31 A.L.R. 853; and 35 A.L.R. 503.)

Under articles of association in form of declaration of trust, trustees and shareholders are individually liable for the association's debts, notwithstanding attempted limitation of liability. WEBER ENGINE Co. v. ALTER (reported herewith) ante, 158.

In Thompson v. Schmitt (1925) Tex., 274 S. W. 554, where the declaration of trust of an unincorporated "trust," organized to operate a mailorder business, provided that neither certificate holders nor trustees should be personally liable for obligations entered into by the trustees, the court held that the enterprise was a partnership, and declared: "Our statutes impose strict limitations on the right of a person to transact with others the business of buying and selling goods at wholesale or retail in Texas, without liability beyond such person's contribution to the capital of the business.

It is clear that what was done by the certificate holders in this case was to attempt to secure the very exemption from liability for the debts of the mercantile business they were providing the money to conduct, which the statutes accord only to special partners in a limited partnership. They attempted to secure such exemption without procuring anyone to join them as a general partner, and in fact without compliance with a single statutory requirement. They undertook to do the precise thing the statutes were framed to prevent, which was to set up a partnership composed altogether of nonliable partners, save to the extent of their respective capital contributions. The language of chapter 1 of title 102 of the Revised Statutes, as a whole, could hardly be plainer to fix upon each of these certificate holders liability as a general partner for the debts of the business in which they were engaged. . . . It follows that the provision of the articles is invalid which sought to create a partnership in which no one should be liable save as a limited partner." The court further stated that the principle which operated to deny the appellant (certificate holder) exemption from liability was definitely applied to members of a voluntary mutual insurance association, notwithstanding it was held not to be a partnership, in Sergeant v. Goldsmith Dry Goods Co. (1920) 110 Tex. 490, 10 A.L.R. 742, 221 S. W. 259.

.

Upon a rehearing in Continental Supply Co. v. Adams (1925) - Tex. Civ. App., 272 S. W. 329, a majority of the court took the view that, where the creditor of a trust "syndicate" did not expressly agree to an exemption of the stockholders from liability for the debt, they could not escape such liability. The dissenting judge considered that the creditor was charged with notice of the general practice of filing such declarations of trust, and thereby with notice of the limitations contained in the one in question, which was filed. In this connection, however, it may be noted that the only limitation in the declaration in question (which was set out in full in the majority opinion) apparently was that there should be no liability against the trustees or shareholders "by reason of a failure to produce oil or gas." And see reference to this case in subdivision III. b, 1, infra.

The decision in Oden v. Bone (1924) Tex. Civ. App. 263 S. W. 640 (see 35 A.L.R. 503), was relied upon, however, in Dayle L. Smith Oil Co. v. Continental Supply Co. (1924) Tex. Civ. App. 268 S. W. 489, in holding that shareholders of the association or trust were not bound on a note signed in its name, where the declaration of trust contained a provision relieving them of personal liability, and the payee not only knew of such provision, but extended credit to the firm in the very face of such knowledge, the court observing that the creditor did not indicate that it regarded them as liable for the debt, or that it had extended the credit upon any consideration other than the assets and prospects of the association,

and that it was apparent that none of the creditor or debtor parties believed or assumed that the shareholders would be liable as individual members of a partnership.

And in Shelton v. Montoya Oil & Gas Co. (1925) Tex. Civ. App. —, 272 S. W. 222, shareholders who were expressly exempted from personal liability were held not to be liable on notes given by the "trust," even upon the assumption that it was a partnership, since the holder knew of the limitation of liability and dealt in respect thereto, the limitation being under these circumstances valid and effective, the court relying upon Oden v. Bone (Tex.) supra, and George v. Hall (1924) - Tex. Civ. App. —, 262 S. W. 174 (see 35 A.L.R. 505).

-

The validity as between the trustees and shareholders, of a provision in the declaration of trust of an association that the trustees should have no power to bind the shareholders personally, and that it should be their duty to embody in every written instrument a stipulation that neither they nor the shareholders should be personally liable thereon, was upheld in Mims v. Stephens County-Ranger Oil Co. (1924) Tex. Civ. App., 268 S. W. 1014, holding that a trustee who became liable on a note executed by him for the association was not entitled to contribution from the other shareholders, since that provision was a contract between the trustees and shareholders, which was violated by his failure to embody such a stipulation in the note. The provision was not effective, however, against the payee of the note in question, who, having agreed to purchase stock upon a certain condition, received the note in return for his stock, and sold it before maturity, and accordingly such payee, who became liable as indorser, was entitled to such contribution.

See also Farmers' State Bank & T. Co. v. Gorman Home Refinery (1925)

Tex. Civ. App. —, 273 S. W. 694, holding that, in view of an agreement, implied in fact, between the defendant trust and the bank which held its note, that the latter would look only to the trust assets, individual

ties.

No later decision herein. For earlier cases, see annotation in 7 A.L.R. 618.

III. Purpose and legal nature.

a. Purposes for which business trust may be formed.

(Supplementing annotations in 7 A.L.R. 619; 10 A.L.R. 887; 31 A.L.R. 856; and 35 A.L.R. 503.)

In comparatively few of the recent cases have the trusts apparently been formed exclusively for real estate or building purposes. In fact, the only cases covered by the present annotation in which the purpose seems to have been thus restricted are Willey v. W. J. Hoggson Corp. (1925) Fla. - 106 So. 408 (real estate); and Greco v. Hubbard (1925) 252 Mass. 37, 147 N. E. 272 (building).

However, in many of the cases the acquiring and holding of real estate has been one of the expressed purposes, there being a decided tendency in the recent trust declarations to broaden the purposes so as to authorize the trust to engage in industries of a more extensive and varied nature, in connection with which the acquiring and holding of real estate seems to be commonly included.

Thus, in Bouchard v. First People's Trust (1925) Mass. -, 148 N. E. 895, the purpose of the trust was "to undertake and carry on anywhere any business transaction or operation which an individual could legally undertake or carry on conformably to the law of the land where the business transaction or operation is undertaken and carried on," this clause being followed by an enumeration of a great variety of kinds of business in which the trustees might engage, accompanied by the specific statement that the object of the trust and the power of the trustees was not to be limited in any way thereby. (The business which this trust actually conducted included the making of loans secured by mortgages and pledges, purchasing accounts, stocks, bonds, notes, and conditional sale contracts, and also acquiring a large office building.) The

purchase of conditional sale contracts was also the business conducted by the trust in Forgan v. Mackie (1925) 232 Mich. 476, 205 N. W. 600.

In Gordon Campbell Petroleum Co. v. Gordon Campbell-Kevin Syndicate (1926) Mont., 242 Pac. 540, the syndicate's declaration recited the purposes of acquiring certain real property, holding the same in trust, and exploring it for oil and gas, and conducting other operations enumerated.

Most of the Texas trusts seem to have been formed for the purpose of operating oil and gas wells. See, for example, Dayle L. Smith Oil Co. v. Continental Supply Co. (1924) — Tex. Civ. App., 268 S. W. 489, and Continental Supply Co. v. Adams (1925)

Tex. Civ. App., 272 S. W. 325. And see Continental Supply Co. v. Robertson (1924) 166 Ark. 52, 265 S. W. 659.

The owning and operation of coal mines was apparently the principal purpose in Marchulonis v. Adams (1924) 97 W. Va. 517, 125 S. E. 340; this having been carried into effect; other purposes were also specified in the declaration, including the dealing in coal and oil and operation of boats. And see, as to mining operations, Erisman v. McCarty (1925) 77 Colo. 289, 236 Pac. 777, and Wimer & Co. v. Downs (1925) 77 Colo. 377, 237 Pac. 155.

In Wright v. Webb (1925) 169 Ark. 1145, 278 S. W. 355, the trust was created for the purpose of selling interest-bearing contracts and lending money to holders of contracts at a low rate of interest for the purpose of building homes; the court expressly refrained from commenting upon the character of this business,-its providence or improvidence.

The trust in Gray v. Lincoln Housing Trust (1924) 229 Mich. 441, 201 N. W. 489, conducted a business along the lines of a building and loan association; and the making of loans on cattle was the business conducted in Cattle Raisers' Loan Co. v. Sutton (1925) Tex. Civ. App. —, 271 S. W.

233. The scope of the trust in Reeves v.