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The committee which acted for the National Conference of Commissioners on Uniform State Laws in preparing the Uniform Common Trust Fund Act was as follows:

GEORGE G. BOGERT, Univ. of Chicago Law School, Chicago, Ill., Chairman

GEORGE E. BEERS, 205 Church St., New Haven, Conn.

JOHN C. BILLS, 2288 First Natl. Bank Bldg., Detroit, Mich.

FRED T. HANSON, McCook, Nebr.

L. BARRETT JONES, Lamar Life Bldg., Jackson, Miss.

HARRY P. LAWTHER, Tower Petroleum Bldg., Dallas, Tex.

WILLARD B. LUTHER, 10 State Street, Boston, Mass.

HENRY UPSON SIMS, First Natl. Bank Bldg., Birmingham. Ala.

JOHN H. WIGMORE, 357 E. Chicago Ave., Chicago, Ill.

WM. F. BRUELL, Warne Bldg., Redfield, S. D., Chairman, Uniform Property Acts

Section

Copies of all Uniform Acts and other printed matter issued by the Conference may be obtained from

The Committee which acted for the National Conference of Commissioners on Uniform State Laws in preparing the Amendments to the Uniform Common Trust Fund Act was as follows:

WILLIAM L. BEERS, 205 Church St., New Haven, Conn., Chairman

RUPERT R. BULLIVANT, Pacific Bldg., Portland 4, Ore.

C. WALTER COLE, Towson, Md.

L. W. FEEZER, College of Law, University of Arizona, Tucson, Ariz.

SPENCER A. GARD, Iola, Kans.

FRED T. HANSON, 215½ Main St., McCook, Nebr.

HOMER B. HARRIS, Lincoln, Ill.

W. J. JAMESON, Electric Bldg., Billings, Mont.

RALPH N. KLEPS, State Capitol Bldg., Sacramento, Calif.

JAMES K. NORTHAM, 827 Lemcke Bldg., Indianapolis, Ind.

JOHN CARLYLE PRYOR, Tama Bldg., Burlington, Iowa

MURRY M. SHOEMAKER, First Natl. Bk. Bldg., Cincinnati 2, O.

GEORGE G. BOGERT, Hastings College of Law, 515 Van Ness Ave., San Francisco,

Calif. (Member of Executive Committee), Ex-Officio

Copies of all Uniform Acts and other printed matter issued by the Conference may be obtained from

A common trust fund is a group of securities set aside by a trustee for investment by two or more trusts operated by the same trustee. It is almost invariably used by banks and trust companies, and not by individual trustees.

The purposes of such a common or joint investment fund are to diversify the investments of the several trusts and thus spread the risk of loss, and to make it easy to invest any amount of trust funds quickly and with a small amount of trouble.

Such a common trust fund cannot legally be operated without statutory sanction, because its operation involves a mixture of trust funds which was not permitted by doctrines of equity. There is a strong sentiment among trust men that the great utility of these common trust funds justifies a statutory exception to the rule regarding the mixture of two or more trust funds.

The Uniform Common Trust Fund Act is a simple enabling statute suitable for adoption by any state which is willing to permit banks and trust companies to set up one or more common trust funds. The Uniform Act does not set out in detail the restrictions on the operation of such common trust funds, except that they must be composed of investments legal for trusts in that state. The reason for not covering in this proposed Uniform State Act the details of the operation of such a common trust fund is that as a practical matter such details are covered by the regulations issued by the Federal Reserve Board which went into effect December 31, 1937.

The Federal Revenue Act of 1936 provides that a common trust fund shall be taxed as an association on its income unless it is operated in accordance with regulations issued by the Federal Reserve Board. Consequently, every bank or trust company, whether a national or a state institution, will have to operate its common trust funds in accordance with the Federal Reserve Board regulations if it wants to escape the federal corporation income tax, and the difference between such tax and the individual income taxes assessed against the different beneficiaries of the trusts would be so great that no trustee could afford to operate its fund otherwise than in accordance with the Federal Reserve Board regulations.

Therefore, the passage by a state of the Uniform Common Trust Fund Act will enable banks and trust companies in that state to set up one or more common trust funds composed entirely of legal trust investments for its fiduciary funds, these common trust funds necessarily being subject to restrictions and regulations of the Federal Reserve Board as they exist from time to time.

Be it enacted ........

SECTION 1. Establishment of Common Trust Funds. Any bank or trust company qualified to act as fiduciary in this state may establish common trust funds for the purpose of furnishing investments to itself as fiduciary, or to itself and others, as co-fiduciaries; and may, as such fiduciary or co-fiduciary, invest funds which it lawfully holds for investment in interests in such common trust funds, if such investment is not prohibited by the instrument, judgment, decree, or order creating such fiduciary relationship, and if, in the case of co-fiduciaries, the bank or trust company procures the consent of its co-fiduciaries to such investment.

SECTION 2. Court Accountings. Unless ordered by a court of competent jurisdiction the bank or trust company operating such common trust funds is not required to render a court accounting with regard to such funds; but it may, by application to the [ ] court, secure approval of such an accounting on such conditions as the court may establish.

When an accounting of a common trust fund is presented to a court for approval, the court shall assign a time and place for hearing and order notice thereof by: (1) publication once a week for [three] weeks, the first publication to be not less than [twenty] days prior to the date of hearing, of a notice in a newspaper having a circulation in the [county] in which the bank or trust company or branch thereof operating the common trust fund is located, and (2) mailing not less than [fourteen] days prior to the date of the hearing a copy of the notice to all beneficiaries of the trusts participating in the common trust fund whose names are known to the bank or trust company from the records kept by it in the regular course of business in the administration of said trusts, directed to them at the addresses shown by such records, and (3) such further notice if any as the court may order. [As Amended Sept. 1952.]

In approximately twenty states there are common trust fund provisions containing the substance of the Uniform Act but in a different form. This amendment is recommended to the corresponding Sections of those Acts, and in the states where there is no provision for court accountings, it is recommended that the whole of Section 2, as amended, be used.

SECTION 3. Uniformity of Interpretation. This Act shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states which enact it.

SECTION 4. Short Title. This Act may be cited as the Uniform Common Trust Fund Act.

SECTION 5. Severability. If any provision of this Act or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect the other provisions or applications of the Act which can be given effect without the invalid provision or application, and to this end the provisions of this Act are declared to be severable.

SECTION 6. Repeal. All acts or parts of acts which are inconsistent with the provisions of this Act are hereby repealed.

SECTION 7. Time of Taking Effect. This Act shall take effect ( ) and shall apply to fiduciary relationships then in existence or thereafter established.