
    In the Matter of the Judicial Settlement of the Accounts and Proceedings of Albert C. Hall and Thomas G. Ritch, as Trustees under the Last Will and Testament of Alvah Hall, Deceased. Albert C. Hall and Thomas G. Ritch, as Trustees under the Last Will and Testament of Alvah Hall, Deceased, Appellants. Isabel M. Hall and Others, Respondents.
    
      Trust — an investment of the funds in an umbrella, trust is unlawful, under a will authorizing iheir investment “ in any .securityT
    
    Where a will made by a person who had been engaged in the umbrella manufacturing business, after giving the testator's executors and trustees the power to-sell' his real and personal .estate or .to do any other acts in relation thereto-which in their judgment should be for the benefit of the estate, .confers upon . them “ full power to reinvest the proceeds of such sale or other act as aforer said in any security, real or personal, which they may deem to be for the benefit of my estate and calculated to carry out the intention of this my will,” the executors and trustees have no power to invest the moneys of' the trust estate . in debenture .stock of a combination, or tract organized for the purpose of controlling the umbrella manufacturing business ■— especially where the testator directed his business to be closed on the first day of July or the first day of January immediately following his decease, thus negativing the idea that he desired his money to be kept in the umbrella business.
    Appeal by Albert O. Hall and Thomas' Gr. Ritch, as trustees under the last will and testament of Alvah Hall, deceased, from so much of a decree of the Surrogate’s Court of the county of Hew York, entered in the office of said Surrogate’s Court on the 29th day of July, 1899, as confirmed the report of a referee and adjudged the investment of $25,000 of the trust estate in the stock of The Umbrella Company to have been illegal and unauthorized.
    This appeal was transferred from the first department to the second department.
    
      C. N. Bovee, Jr., for the appellants.
    
      George H. Adams and Bernard J. Tinney, special guardian, for the respondents.
   Willard Bartlett, J.:

The 7th numbered paragraph of the will of Alvah Hall authorized his executors and trustees to grant, bargain, sell and to convey all or any part of his estate, real and personal, on such terms and in such manner, and at such times as they should deem best, and to improve, mortgage, lease or do any other acts in relation to the testator’s property, either real or personal, provided that in the judgment of said executors and trustees such sale or other act should be for the benefit of the estate. The paragraph concluded with these words: “ And I hereby give my said executors and trustees hereinafter named full power to reinvest the proceeds- of such sale or other act as aforesaid in any security, real or personal, which they may deem to be for the benefit of my estate and calculated to carry out the intention of this my will.”

Assuming to act under the authority conferred upon them by the clause which I have quoted, the appellants, on August 15, 1892, invested $25,000 of moneys belonging-to the trust estate in debenture stock of a corporation known as the Umbrella Company, which had then just been organized. It.cleaily appears from the evidence that this corporation was a combination constituting what is now commonly called a trust. Although in one part of his testimony Mr. Albert 0. Hall declares that it was not a trust, he speaks of it elsewhere as the umbrella trust. The umbrella trust,” he says, consisted of eleven firms organized under the laws of the State of Hew York into, a corporation doing business in Hew York city, Boston," Philadelphia and Lancaster, Pennsylvania.” In another place he says, “ I went into the trust,” and he tells us that he took $85,000 of the debentures himself. The total issue of. debenture stock amounted to $1,092,000.

■ The trustees did not subscribe directly for the $25,000 of this debenture stock which they obtained, hut they acquired it from two concerns that went out of the umbrella business at the time the trust was formed. Mr. Hall testifies that he succeeded in getting some of the stock from these different persons. It is plain enough, however, from his testimony, taken as a whole, that the trustees, in making this investment of $25,000 of the trust estate, were virtu-' .ally subscribing that amount to the enterprise by which the combination known as the umbrella trust proposed to control the umbrella manufacturing, business in this country or this part of the country.

I agree with the learned counsel for the appellants that the 7th clause of Alvah Hall’s will confers upon his executors and trustees the power to invest the funds of the trust estate in securities otlier than those ordinarily approved as trust investments under the authority of King v. Talbot (40 N. Y. 76). The power, here seems to be as broad as that which was considered by the Appellate Division in the first department in the case of Lawton v. Lawton. (35 App. Div. 389); but in the Lawton case it was conceded that the investments by the trustee were' perfectly proper investments if the will conferred upon him a discretionary power to invest outside the ordinarily approved securities. (See opinion of Van Brunt, P. J., at foot of p. 395.) In the present case no such concession is made, nor do I see how it properly could be made. Here the money of the estate, part of which belonged to infants, was really embarked in a business enterprise -of a novel character, involving great risk, as was shown by the collapse of the umbrella trust after a life of only two years. It seems to me a misuse of language to apply the term securities to the debenture stock which was issued to the appellants as evidence that they had put the money of their cestui que 1/rust into this enterprise. The transaction was in no true sense an investment in any security, as contemplated by the 7th paragraph of the will, but was really a contribution of the money ‘of the estate to be used as capital in a risky industrial undertaking, If the testator had desired his money to be kept in the umbrella business, which he had carried on under the name of Alvah Hall & Co. during his lifetime, he would hardly have directed, by the 6th numbered paragraph of his will, that said business should be closed on the first day of July or the first day of January immediately following his decease.

The employment by trustees of the property or credit of an infant in trade, or in the prosecution of manufacturing or speculative enterprises has been uniformly condemned as illegal.” ( Warren v. Union Ba/rik of Rochester, 157 H. Y. 259, 268.) Giving the broadest possible construction which its language will justify to the 7th clause of the will in this case, it does not, in my judgment, contemplate or authorize such a use of the money of the estate as was made by these appellants when they put §25,000 of that money into the umbrella trust.

For these reasons I think that the decree of the surrogate- was right and advise that it be affirmed.

All concurred,

Decree of the Surrogate’s Court of Hew York county affirmed, with costs to the special guardian, and costs to the other respondents represented on the argument by Mr. George H. Adams.  