New Jersey § 3a:15-1

§ 3a:15-1.

A fiduciary whose duty it may be to loan or invest funds intrusted to him in his fiduciary

capacity may, without special order of any court, invest and reinvest such funds,

or any part thereof, and the income derived therefrom, in any of the following: UNITED STATES BONDS a. Stocks or bonds or interest-bearing notes or obligations of or guaranteed by the

United States, or those for which the faith of the United States is distinctly pledged

to provide for the payment of the principal and interest thereof; STATE BONDS b. Bonds or interest-bearing notes or other obligations of or guaranteed by this State

or bonds authorized by its laws issued or to be issued by any commission appointed

pursuant to any law of this State; BONDS OF OTHER STATES, TERRITORIES OR INSULAR POSSESSIONS c. Bonds of any State in the Union or of any territory or insular possession of the

United States issued by authority of the Legislature thereof, provided such State,

territory or insular possession has not, within 120 days next preceding such investment,

defaulted in the payment of any part of either principal or interest on any of its

bonds so issued; MUNICIPAL OR SCHOOL BONDS d. Bonds or interest-bearing notes or obligations of any county, city, town, township,

borough, village or other municipal or political subdivision of this State issued

under authority of a law of this State, or in bonds of any public school district,

water district, union-graded school district or regional board of education of this

State, or in refunding or renewal bonds of any such school district, water district

or board of education issued under authority of a law of this State; provided, that

at the time of making any such investment the issuer of such bonds shall not be in

default in the payment of any principal of or interest upon any bonds issued by it; BONDS OF COUNTIES, MUNICIPALITIES AND SCHOOL DISTRICTS OF OTHER STATES e. Stocks, bonds, interest-bearing notes or obligations of any county, city, town,

township, borough, village or school district of any other State of the Union issued

pursuant to the authority of any law of such State; provided, that such county, city,

town, township, borough, village or school district shall not have been in default

in the payment of any principal or interest on any of its stocks, bonds, interest-bearing

notes or obligations within 120 days next preceding such investment; provided, that

such county shall have a population of not less than 20,000 and that any such city,

town, township, borough, village or school district shall have a population of not

less than 5,000; REVENUE BONDS OF A GOVERNMENTAL UTILITY f. Revenue bonds issued by a unit; provided, that the unit shall not, at the time

of making the investment, be in default in the payment of principal or of interest

on any of the revenue bonds issued by it or in the performance of any of the covenants,

agreements or other provisions of the revenue bonds issued by it and shall not be

in default with respect to any of the provisions or requirements of the enabling legislation

relative to such revenue bonds; provided further, that such enabling legislation

requires the unit to fix, maintain and collect for the utility service furnished by

the unit charges adequate to pay the principal of and interest upon all revenue bonds

payable from such revenues and to provide for the operation and maintenance of the

utility including provision for all repairs and renewals, and all other charges and

liens whatsoever payable from such revenues and to pledge a sufficient amount of such

revenues for the payment of principal of and interest on such revenue bonds and other

obligations of the unit having a lien or charge on such revenues equal to or prior

to the lien or charge of the revenue bonds thereon. For the purposes of this paragraph: (1) “revenue bonds” mean any bonds, including

refunding bonds, or other interest-bearing obligations of a unit for the payment of

the principal of and interest on which the revenues derived from a utility owned or

operated by the unit which issued such bonds or obligations, are pledged, or any such

bonds or obligations additionally secured by a pledge of the taxing power or other

revenues of the unit; (2) “unit” means a unit authorized to construct, own or operate

a utility as “utility” is hereinafter defined and includes any State, any political

subdivision of any State, any agency or instrumentality, corporate or otherwise, of

any State or of any political subdivision of any State, including but not by way of

limitation any county, city, town, township, village, authority, district, commission,

agency or instrumentality of any State or of any political subdivision of any State,

any commission, board, agency or other public body, corporate or otherwise, created

by any Act of Congress or by any State, or pursuant to a compact between any 2 or

more States or between any 2 or more political subdivisions, authorities, districts,

commissions, agencies or instrumentalities of the same State, or between any 2 or

more political subdivisions, authorities, districts, commissions, agencies or instrumentalities

of any 2 or more States, or any corporation which is wholly owned, directly or indirectly

by any of the foregoing; (3) “State” means any of the United States and any territory

or insular possession of the United States; (4) “enabling legislation” means any

act or resolution of Congress or of the Legislature of any State or of the Legislatures

of any States, or any act, ordinance, resolution or other authorization by or of a

unit or by or of the governing body of any unit, authorizing or providing for the

issuance of revenue bonds, or any mortgage, trust deed, trust indenture, trust agreement

or other instrument executed as security for revenue bonds; (5) “utility” means any

waterworks system, gas system, electric light system, express or other highway or

highways, bridge, tunnel, ferry or other public utility service or operation, or any

combination of 2 or more of the foregoing; (6) “system” means a supply or generating

system, transmission or distribution system or any combination of supply, generating,

transmission or distribution systems, and all appurtenances thereof; BONDS OF THE DOMINION OF CANADA AND PROVINCES g. Bonds, notes or other interest-bearing obligations issued, guaranteed, or assumed

by the Dominion of Canada or by any of the provinces of the Dominion of Canada; RAILROAD BONDS AND EQUIPMENT OBLIGATIONS h. (1) Bonds issued, guaranteed, or assumed by a railroad corporation organized and

existing under the laws of any State of the United States or of the District of Columbia

or of the United States, the net earnings of which, including those of any predecessor

company or companies, before deduction of Federal income and profits taxes have been

sufficient, in any 3 of the 4 fiscal years next preceding the date of purchase, to

cover annual requirements for fixed charges, including contingent interest on income

bonds, an average of 1 1 / 2 times; provided, that neither net earnings nor fixed charges shall be deemed to

include interest on bonds of its own or a subsidiary or lessor company repurchased

or held as an investment by such railroad corporation; or in bonds secured by mortgage

upon a railroad terminal, depot, tunnel or bridge used by 2 or more railroad corporations

which have jointly and severally guaranteed the payment of principal and interest

of such bonds or have otherwise covenanted or agreed to pay the same, at least one

of which guarantors shall have net earnings as above; or in bonds of any railway

terminal or dock company of this State, secured by first mortgage on terminal or dock

property fronting on the Hudson river or New York bay and having an assessed value

for the purpose of taxation in excess of the amount of the entire issue of bonds,

and used and occupied as dock or terminal facilities by any railroad now operating

in this State; provided, that no part of the principal or interest of such bonds

is in default at the time of making the investment; h. (2) Mortgage bonds of a railroad corporation organized and existing under the laws

of any State of the United States or of the District of Columbia or of the United

States which are a first lien or a collateral first lien on at least 2 / 3 of the mileage covered, of which at least 1 / 2 of said rail mileage shall be main line mileage, the earnings of which allocable

to such mileage are estimated to be on the average at least 1 1 / 2 times interest charges on such bonds for any 3 of the 4 fiscal years next preceding

such investment; provided, that such a railroad corporation shall not have been in

default on any part of the principal or interest of any of its bonds within 120 days

next preceding such investment, except that nonpayment of contingent interest on income

bonds, or nonpayment of interest on any bonds on which the payment of interest is

discretionary rather than fixed, shall not constitute such a default. For the purpose of this paragraph, should the earnings of a railroad not be susceptible

to exact allocation under the ordinary accounting methods of a railroad, information

as to earnings may be obtained from any financial, statistical, investment or other

publication or service referred to in paragraph a. of section 3A:15-2 of this Title; h. (3) Equipment obligations or certificates of a railroad corporation organized and

existing under the laws of any State of the United States or of the District of Columbia

or of the United States, secured by railroad equipment under equipment or car trust,

lease or conditional sale, or by first lien thereon; BONDS SECURED BY FIRST MORTGAGE i. (1) Bonds or other obligations secured by first mortgages on improved real estate

in this State or in the States of New York or Pennsylvania including improved farm

lands therein; provided, the amount of any such bond or other obligation and mortgage

shall not at the time of making the investment therein exceed 60% of the estimated

worth of the real estate covered by the mortgage and the rate of interest shall not

be more than the legal rate per annum; i. (2) Whenever a fiduciary owns or has an expressed or implied power of sale over

any real estate, or any interest or interests therein, however acquired, he may, in

the exercise of discretion, sell such real estate, or such interest or interests therein,

upon such terms and conditions as he shall deem to be for the best interests of the

estate or trust, and, as an incident to such sale, may invest in a bond or other obligation

secured by a purchase money mortgage, which shall be a first lien upon the real estate

or interest or interests therein sold, in any amount up to but not exceeding 80% of

the sale price; BONDS SECURED BY MORTGAGE ON LEASEHOLD OF CAMP MEETING ASSOCIATIONS j. Bonds secured by first mortgage on leasehold estates of real estate in this State

of camp meeting associations; provided, however, that such real estate, except as

to such leasehold, is free and clear of all liens and encumbrances of every kind and

character whatsoever; provided further, that such leasehold at the time of the giving

of said bond and mortgage has an unexpired term of not less than 25 years, and is

a lease of the entire interest in such real estate, except the reversion thereof;

provided further, that no investment shall be made in excess of 60% of the appraised

value of such leasehold estate and the improvements thereon, which appraisement may

be made by a committee of any savings bank, banking institution, trust company or

insurance company, and, in the case of an individual, by 2 persons appointed by any

such individual for such purpose; provided further, that any such camp meeting association

shall consent to the giving of such bond and mortgage, subject, nevertheless, to all

the conditions of the lease; provided further, that no savings bank, banking institution,

trust company or insurance company, organized under the laws of this State, and no

person acting as fiduciary shall make loans on leasehold estates of any such camp

meeting association until the camp meeting association shall first have been approved

for such purpose by the Commissioner of Banking and Insurance of the State of New

Jersey; UTILITY BONDS k. Bonds, notes or other evidences of indebtedness of any public utility corporation

organized under the laws of any State of the United States or of the District of Columbia

or of the United States, not less than 70% of the gross operating revenues of which,

on a consolidated basis, in the fiscal year next preceding such investment, was derived

from operation of one or more of the following utility services, viz.: electric light

or power, telephone or telegraph, steam, manufactured gas, natural gas or a mixture

of manufactured and natural gas; provided, that the gross operating revenues of such

corporation including predecessor and constituent corporations on a consolidated basis

shall have averaged not less than $2,000,000.00 per annum for the 3 fiscal years next

preceding such investment; provided further, that the net operating revenues of such

corporation on a consolidated basis, including those of predecessor and constituent

corporations, after all operating expenses and depreciation, but before State and

Federal income and profits taxes, available for fixed charges for rentals and interest,

shall have averaged annually for the 3 fiscal years next preceding such investment

not less than 1 1 / 2 times the average annual requirements during such period for such fixed charges,

subsidiary preferred stock dividends and minority interests excluding intercompany

items; WATER COMPANY BONDS l. The bonds, notes or other evidences of indebtedness issued guaranteed, or assumed

by a public utility corporation organized and existing under the laws of any State

of the United States or of the District of Columbia or of the United States not less

than 80% of the revenues of which are, at the time of making such investment, derived

from the sale of water to consumers through a distribution system owned or leased

by it, or which such corporation has otherwise covenanted or agreed to pay or cause

to be paid, whether by lease, indorsement, supplemental indenture or otherwise; provided,

that the gross operating revenues of such corporation, including those of predecessor

and constituent corporations, shall have averaged not less than $500,000.00 per annum

for the 5 fiscal years next preceding such investment; provided further, that the

net operating revenues of such corporation, including those of predecessor and constituent

corporations, after all operating expenses but before deducting charges for depreciation,

renewals and State and Federal income and profits taxes, available for fixed charges

for rentals and interest on all outstanding debt, shall have averaged annually for

the 3 fiscal years next preceding such investment, not less than 1 1 / 2 times the average annual requirement during such period for such fixed charges excluding

intercompany items; UTILITY PREFERRED STOCKS m. Preferred stocks issued, guaranteed, or assumed by a public utility corporation

organized and existing under the laws of any State of the United States, or of the

District of Columbia, or of the United States, not less than 70% of the gross operating

revenues of which in the fiscal year next preceding such investment was derived from

the operation of one or more of the following utility services, viz.: artificial

gas, the sale of natural gas or of a mixture of natural and artificial gas, steam,

electric light or power, telephone, telegraph, or water; provided, that such preferred

stock shall be cumulative as to dividends and shall not be preceded, as to claim on

dividends or assets of the corporation, in case of liquidation or dissolution, by

any other class of stock; provided further, that the gross operating revenues on

a consolidated basis of such corporation, including those of predecessor and constituent

corporations, shall have averaged not less than $5,000,000.00 per annum for the 3

fiscal years next preceding such investment; provided further, that the mortgage

bonds and debentures of the corporation, if such are outstanding, shall be legal investments

under this chapter; provided further, that the net operating revenues of the corporation

on a consolidated basis including those of predecessor and constituent corporations

after all operating expenses, taxes and depreciation shall have averaged annually

for the 3 fiscal years next preceding such investment not less than 1 1 / 2 times the average dividend requirements on such preferred stock, any other equally

ranking preferred stock and for fixed charges for rentals and interest during such

period, excluding intercompany items; INDUSTRIAL BONDS AND NOTES n. The bonds, notes or other evidences of indebtedness of any industrial corporation

organized under the laws of any of the following: any State of the United States,

the District of Columbia, the United States, the Dominion of Canada or any province

of the Dominion of Canada; provided, that in each of the 3 fiscal years next preceding

such investment, the gross revenues on a consolidated basis of the said industrial

corporation shall not have been less than $10,000,000.00; provided further, that

the balance of income available for the payment of interest, after deducting all operating

expenses, depreciation and taxes, except State, Federal, or provincial income and

profits taxes, shall have averaged annually for the 5 fiscal years next preceding

such investment, twice the average annual interest charges; provided further, either

that the current assets of said industrial corporation on a consolidated basis, as

shown by its latest published statement prior to the making of such investment, shall

be at least 1 1 / 2 times the current liabilities, or that the difference between the current assets

and current liabilities, represented as net current assets or net working capital,

as shown by such latest published statement, shall not be less than the total indebtedness

of the corporation, excluding any indebtedness included among the current liabilities; INDUSTRIAL PREFERRED STOCKS o. Preferred stocks of any industrial corporation organized under the laws of any State

of the United States or of the District of Columbia or of the United States; provided,

that such preferred stock shall be cumulative as to dividends; provided further,

that in each of the 3 fiscal years next preceding such investment, the gross revenues

of the said industrial corporation on a consolidated basis shall not have been less

than $10,000,000.00; provided further, that the balance of income available for the

payment of interest and dividends on such preferred stock and on any other preferred

stock ranking equally with or senior to such preferred stock together, after deducting

all operating expenses, depreciation and taxes, shall have averaged annually for the

5 fiscal years next preceding such investment, 2 1 / 2 times the average annual interest charges and preferred dividend requirements on

such preferred stock and on all senior and equally ranking preferred stocks; provided

further, either that the current assets of said industrial corporation on a consolidated

basis, as shown by its latest published statement prior to the making of such investment,

shall be at least 1 1 / 2 times the current liabilities or that the difference between the current assets and

current liabilities, represented as net current assets or net working capital, as

shown by such latest published statement, shall not be less than the total indebtedness

of the corporation and all equally ranking and senior preferred stocks together, excluding

any indebtedness included among the current liabilities; BONDS OF JOINT STOCK OR FEDERAL LAND BANK p. Bonds issued by a joint stock land bank authorized to do business in this State

or by a Federal Land Bank, organized pursuant to an Act of Congress entitled “An act

to provide capital for agricultural development, to create standard forms of investment

based upon farm mortgage, to equalize rates of interest upon farm loans, to furnish

a market for United States bonds, to create government depositaries and financial

agents for the United States, and for other purposes”, approved July 17, 1916 ( 12 U.S.C.A. § 641 et seq. ); Consolidated bonds of the twelve Federal Land Banks issued under and pursuant to the

above-mentioned Act of Congress as now or hereafter amended and known as the “Federal

farm loan act”; CERTIFICATES OF DEPOSIT AND SAVING ACCOUNTS q. Interest-bearing time certificates of deposit of, or by making interest-bearing

time deposits in a banking institution as defined in section 1 of chapter 67 of the

laws of 1948 (The Banking Act of 1948), including, where the fiduciary is such a banking

institution, such certificates of deposit of such banking institution itself or such

deposits with itself in its banking department; provided, that the amount of each

such certificate of deposit and the amount of each such deposit is insured in full,

pursuant to any law of the United States providing for the insurance of deposits in

banking institutions; INVESTMENTS LEGAL FOR SAVINGS BANK r. Any loans or securities which are or hereafter may be made lawful investments under

the statutes of this State, for savings banks of this State; SHARES OF SAVINGS AND LOAN ASSOCIATIONS s. Shares of or accounts in savings and loan associations organized under the laws

of this State, or Federal savings and loan associations organized under the laws of

the United States, the principal office of which is located in New Jersey; provided,

that the accounts of the association whether State or Federally chartered are insured

by the Federal Savings and Loan Insurance Corporation, pursuant to Title 4 of an Act

of Congress entitled “national housing act”; approved June 27, 1934 ( 12 U.S.C.A. § 1724 et seq. ), supplemented or amended, or by any other corporation created or organized under

the laws of the United States, which corporation is an instrumentality of the United

States; provided, however, that such investment shall not exceed the aggregate amount

for which any member or investor of any such association shall be insured; BONDS SECURED BY MORTGAGE ON LANDS ACQUIRED AT TAX SALE t. Bonds secured by mortgage, which shall be a first lien upon real estate, the title

to which shall have been secured by the owner or prior owners through a certificate

of tax sale foreclosed in the former Court of Chancery or the Superior Court of New

Jersey; provided, the real estate shall be estimated to be worth at least twice the

amount loaned, and the rate of interest is not less than 3% nor greater than 6% the

legal rate per annum; TRUST MORTGAGES AND PARTICIPATION CERTIFICATES u. Shares or parts of bonds secured by mortgage or bonds secured by trust mortgage;

and participation certificates or coupon bonds which entitle the holder to a proportionate

share in a series or number of mortgages and bonds, or extensions or renewals thereof,

deposited under a trust agreement with a trust company, bank or title guarantee corporation

organized under the laws of this State, or a national bank authorized to do business

in this State; provided, that the securities authorized in this paragraph u shall

be a first lien upon improved real estate and the amount secured by the mortgages

shall not, at the time the loan is made, exceed 60% of the estimated worth of the

real estate covered by the respective mortgages and the rate of interest not less

than three nor greater than 6% the legal rate per annum; and provided further, that

no share or part of such bonds and mortgages or bonds secured by such trust mortgage

shall be subordinate to any other bonds issued thereunder or subordinate to any prior

interest therein; and provided further, that bonds and mortgages in parts of which

a fiduciary invests trust funds or, in the case of trust mortgages, the trust mortgage,

together with any guarantees of payment, insurance policies and other instruments

and evidences of title relating thereto, shall be held for the benefit of the fiduciary

and any other persons interested therein, by a trust company, bank or title guarantee

corporation authorized to do business in this State, or jointly by such a corporation

and an individual who is a citizen and bona fide resident of this State, and, in mortgages

other than trust mortgages, there shall be executed by such corporation and delivered

to each person who becomes interested in the bond and mortgage, a certificate stating

that the corporation, or corporation and individual jointly, as the case may be, holds

the instruments for the benefit of the fiduciary and any other persons therein interested,

among whom may be included the aforesaid corporation or individual. A corporation or a corporation and an individual jointly, issuing certificates pursuant

to this paragraph, shall keep a record in proper books of account of all such certificates

issued by it. WHEN SECTION NOT APPLICABLE; POWER OF COURT TO DIRECT INVESTMENTS IN NONLEGAL SECURITIES v. The provisions of this section shall not apply where any trust instrument, will,

or court having jurisdiction of the matter, specially directs in what securities or

investments the trust fund shall be invested. The court to which the fiduciary is accountable shall have the power specially to

direct, from time to time, additional securities or investments in which he may invest. An investment made in accordance with such special directions shall be legal, and

no fiduciary shall be liable for loss occasioned by his compliance therewith.