TRUSTS-DUTY OF THE TRUSTEE TO SELL STOCK IN A FALLING MARKET

Authors

Abstract

Securities were turned over to defendant as trustee, among which were issues of common stock in two sugar companies, under the direction that the trustees were authorized to continue all investments of the testator without any personal liability in doing so. In the executor's accounting the stocks were valued per share at $22 and $12.25 respectively. In the present accounting, instituted by the beneficiary on becoming entitled to the corpus of the trust estate, the stocks had fallen to $7 and $.50 respectively. The trust company was experienced in the handling of securities and its officers were advised not to sell in this particular case by men interested in the sugar business. The companies themselves were financially sound, coming through a depression with their assets unimpaired and with their book value greater than ever before. Besides the falling market the only evidence that would tend to create liability was the fact that the trust company had advised some of its customers not to buy this particular stock. Held, the trust company acted prudently in retaining the stock and should not be held liable for a mere error of judgment, reversing the finding of the surrogate's court, 136 Mis. 881, 242 N. Y. S. 210 (1930) as affirmed in 232 App. Div. 781, 249 N. Y. S. 923 (1931). In re Clarke's Will (N. Y. 1931) 177 N. E. 397.

Recommended Citation

TRUSTS-DUTY OF THE TRUSTEE TO SELL STOCK IN A FALLING MARKET, 30 Mich. L. Rev. 815 (1932).
Available at: https://repository.law.umich.edu/mlr/vol30/iss5/33