N.Y. Banking Law § 100-b: Investments as fiduciary; when interest is to be paid; preference

§ 100-b. Investments as fiduciary; when interest is to be paid;

preference. 1. Investments. All investments of money received by any

trust company as executor, administrator, guardian, trustee of a trust

of any kind, receiver, committee, conservator or depositary, shall be at

its sole risk, and for all losses of such money the capital stock,

property and effects of the trust company shall be absolutely liable,

unless the investments are such as are proper when made by an individual

acting as trustee, executor, administrator, guardian, receiver,

committee, conservator or depositary, or such as are permitted in and by

the instrument or words creating or defining the trust. But no corporate

fiduciary shall purchase securities from itself. Any moneys of any such

estate or fund awaiting investment or distribution may be held on

deposit by such trust company in its own name, subject to the provisions

of subdivision four of this section; provided that appropriate entries

showing the share or interest of each such estate or fund in the moneys

so held on deposit shall, at all times, appear upon the records of such

trust company.

2. On and after September first, nineteen hundred thirty-six, no trust

company shall invest in any part interest in a bond and mortgage or note

and mortgage on behalf of any estate or fund held by such trust company

as executor, administrator, guardian, personal or testamentary trustee,

receiver, committee, conservator or depositary except that if the

instrument creating such estate or fund has authorized such trust

company as executor, administrator, guardian, personal or testamentary

trustee, receiver, committee, conservator or depositary to invest in any

part interest in a bond and mortgage or note and mortgage insured by the

federal housing commissioner such trust company may so invest and if the

instrument creating an employee benefit trust has authorized such trust

company to invest in any part interest in a bond and mortgage or note

and mortgage, such trust company may so invest. Any part interest in a

bond and mortgage or note and mortgage heretofore apportioned to any

estate or fund and held by such trust company as executor,

administrator, guardian, personal or testamentary trustee, receiver,

committee, conservator or depositary, and outstanding at any time in the

hands of any estate, fund or person may be repurchased at its face value

by such corporation individually. Such trust company, in any case where

it shall have apportioned or transferred a part interest in any bond and

mortgage or note and mortgage whether to any estate or fund held by it

alone or in conjunction with another person or otherwise, shall be

authorized and empowered, in behalf of all persons interested therein,

to collect the principal and interest and to satisfy and discharge the

mortgage on receiving payment thereof in the amount and in the manner

specified in the bond and mortgage or note and mortgage, to pay the said

principal and interest to the persons entitled thereto and generally to

exercise all of the options reserved to the mortgagee, to enforce in its

own name by appropriate action or proceeding, including foreclosure, any

and all of the covenants in the said bond and mortgage or note and

mortgage, to take such other measures for the protection of the mortgage

loan and the preservation of the security and the management of,

utilization and sale of any real estate which may be acquired on

foreclosure as may be necessary and appropriate and to exercise all

other rights of ownership in respect of the entire bond and mortgage or

note and mortgage. In case any bond, note or mortgage shall be held by,

or in the name of, such trust company and it shall hold any part

interest therein, acting as a fiduciary, whether alone, or in

conjunction with another person or otherwise, it may, prior to April

first, nineteen hundred sixty-nine, waive or modify or agree to waive or

modify, either with or without consideration and prior or subsequent to

maturity, any terms and conditions thereof, including the rate of

interest, and extend or re-extend or agree to extend or re-extend such

bond and mortgage or note and mortgage, for a period of not more than

five years from the time of such extension, by agreement with the owner

of the real property subject to the lien thereof, upon the consent of

the holders of such part interests to the extent of sixty-six and

two-thirds per centum of the whole amount of such bond and mortgage or

note and mortgage, notwithstanding that, at the time of such waiver,

modification, extension or agreement, the value of such real property

may be less than that required by law for an original investment of such

an amount therein by such holder and, in case any such investment is

guaranteed, such trust company may also extend or re-extend or agree to

extend or re-extend the time of payment under the guaranty for a like

period from its due date, and may release or agree to release such

guaranty or from time to time waive or modify or agree to waive or

modify any terms and conditions thereof, including the rate of interest;

provided however, that no such waiver, modification, extension or

agreement shall be made or agreed to unless, at least fifteen days prior

thereto, such trust company shall have notified each holder of such a

part interest in such bond and mortgage or note and mortgage of the

terms and conditions of such contemplated waiver, modification,

extension or agreement. Such notice shall be given by mailing the same

by registered mail to the address or place of residence of each holder

according to the records of such trust company. The notice hereinbefore

provided for shall not be required to be given to any holder of such a

part interest in such bond and mortgage or note and mortgage (1) who, at

the time of the mailing of such notice to holders of part interests in

such bond and mortgage or note and mortgage, was not shown on the

records of such trust company to be such holder, or (2) who, at any time

whether before or after any such waiver, modification, extension or

agreement shall have been made or agreed to, shall have consented to

such waiver, modification, extension or agreement. Any such consent

shall also be binding upon and shall be deemed to be the consent also of

each and every holder of the part interest in such bond and mortgage or

note and mortgage or of any part of such part interest with respect to

which such consent was given who, at the time such consent was given,

was not shown on the records of such trust company to be such holder

whether or not such holder shall have become such holder before or after

such consent was given. Any holder to whom the notice hereinbefore

provided for is required to be given as hereinbefore provided and who

objects to such waiver, modification, extension or agreement shall have

the right to apply, within fifteen days after such notice shall have

been mailed to such holder as hereinbefore provided, to the supreme

court of the county in which the real property securing such mortgage is

located and, subject to the discretion of the supreme court in the

premises, to obtain an order enjoining such waiver, modification,

extension or agreement. In the event of the granting of such an order,

any holder shall have the right to apply to such supreme court and,

subject to the discretion of the supreme court in the premises, to

obtain an order directing a partition of such bond and mortgage or note

and mortgage by a judicial sale thereof. Such sale shall be upon such

notice and advertisement and at such time and place and in such manner

as the court or a justice thereof may direct, but at least fifteen days'

notice thereof shall be given to each holder. The proceeds of the sale

of such bond and mortgage or note and mortgage after deducting the

expenses of such sale, shall be paid into the supreme court and shall be

distributed among such holders according to their respective interests

therein. Such trust companies shall have all the powers heretofore had

under this section or any other provision of law with respect to

investments in part interests in bonds and mortgages or notes and

mortgages for the protection, preservation and liquidation of the trust

property. It is the intent of this subdivision to prohibit after August

thirty-first, nineteen hundred thirty-six, any future apportionments or

investments of any part interests in bonds and mortgages and notes and

mortgages to or investments in part interests of bonds and mortgages and

notes and mortgages for any estate or fund of which such trust company

is executor, administrator, guardian, personal or testamentary trustee,

receiver, committee, conservator or depositary, except as permitted by

this subdivision. Such trust company, however, shall not transfer to any

estate or fund any part interests in bonds and mortgages or notes and

mortgages heretofore purchased, or invested in, from itself or from any

other estate or fund.

Nothing contained in this act shall be construed to affect any

investments in part interest in bonds and mortgages apportioned or

transferred, prior to September first, nineteen hundred thirty-six, to

any estate or fund of which such trust company is executor,

administrator, guardian, personal or testamentary trustee, receiver,

committee, conservator or depositary, nor to affect any action

heretofore taken in accordance with law with respect to such bonds and

mortgages or part interests in said bonds and mortgages; nor to affect

the right of any such trust company to transfer or apportion any such

investment from an estate or fund to a succeeding interest created by

the same instrument under which the investment was made; nor shall it be

construed to impair or otherwise affect the power of such trust company

to apportion to any estate, fund or person interested in such mortgage

its or his proportionate share of the consideration, consisting in whole

or in part of evidences of indebtedness secured by mortgages on real

property received by such trust company on the sale of real property

acquired by foreclosure of such mortgage, or otherwise, and to exercise

with respect to such mortgages on behalf of such estates, funds, or

persons the same powers reserved with respect to the original mortgage.

3. Preference. If dissolved by the legislature or the court, or

otherwise, or liquidated by the superintendent or otherwise, the debts

from any trust company as guardian, trustee, executor, administrator,

committee, conservator or depositary, shall be entitled to priority of

payment from the assets of such trust company on an equality with any

other priority given by this chapter.

4. Interest. On all sums of money not less than one thousand dollars,

which shall be collected, received and held as principal by a trust

company acting as executor, administrator, guardian, trustee, receiver,

committee or conservator under the appointment of any court or officer,

or in any fiduciary capacity under such appointment, or as a depositary

of moneys paid into court, interest shall be paid by such trust company

from sixty days after the receipt thereof until the moneys so received

shall be duly expended or distributed, at a rate equal to the maximum

rate per annum then being paid by such trust company on savings

deposits, except that in the case of a trust company acting as executor

or administrator interest shall not be paid, and the grace period of

sixty days herein provided for shall not be deemed to begin, until five

months after the date of issuance of letters testamentary or of

administration to it; provided however that such trust company shall not

be required to allow any interest upon any such moneys payment of which

is prohibited under any order, regulation or ruling issued under or

pursuant to the "Trading with the Enemy Act" and any amendments thereto,

or under or pursuant to any other law, so long as such prohibition shall

remain in force and effect. If income be accumulated for a minor or

surplus income in excess of expenditures be held for investment by the

committee of an incompetent or the conservator of a conservatee, but not

otherwise, any uninvested balance of such income shall be treated as

principal upon which interest shall be paid as provided in this

subdivision. If interest moneys payable hereunder or any part thereof

shall not annually be expended or distributed pursuant to the terms or

provisions of the trust under which such moneys are held, the amount

thereof not so expended or distributed shall be accumulated by such

trust company for the benefit of the parties interested in such trust

fund, and shall be added to the principal to constitute a new principal

upon which interest shall thereafter be computed. The word "trustee" as

used in this subdivision shall mean a trustee appointed by will or by

any court, and the words "savings deposits" as used in this subdivision

shall mean time deposits with respect to which the depositor is not

required by the deposit contract, but may at any time be required by

such trust company, to give notice in writing of an intended withdrawal

not less than fourteen days before such withdrawal is made, and which is

not payable on a specified date or at the expiration of a specified time

after the date of deposit. For the purposes of this subdivision only,

moneys on which interest is payable as provided herein shall not be

deemed to be demand deposits.