MILLER V. PENDER
34 A.2d 663 (1943)

PROCEDURAL POSTURE: Plaintiff sought review of a decision by the trial court that found that that defendant trustee exercised his best judgment and the care and skill which a man of ordinary prudence would have exercised in dealing with his own property in making and changing trust investments.

FACTS: Securities invested in by the trustee were taken in his own name without any marks on them to show that they belonged to the trust estate The trustee kept the original trust certificates apart from his own in a safe in his house and he made notations of income and remittances on separate slips such that it was possible to trace the funds and to learn the condition of trust affairs and the administration of the trust The certificates depreciated to the tune of $7,666 44

ISSUE: Is a trustee liable for any loss that is only simultaneous with a breach of the duty to earmark and not at all caused by the failure of the trustee in that duty?

HOLDING:Suit in equity by Etta M. Miller and others against George E. Pender, trustee, and another for accounting by defendant trustee. Decree for plaintiffs in an unsatisfactory amount, and they and defendant trustee bring exceptions.

RULE OF LAW: A trustee is not liable for any loss that is only simultaneous with a breach of the duty to earmark and not at all caused by the failure of the trustee in that duty


ANALYSIS: Plaintiff excepted to the trial court's holding that the trustee had broad discretion under the trust to make investments and in these matters the trustee exercised his best judgment and the care and skill of an ordinary prudent person in dealing with his own property. The court ordered a new trial because the test applied by the trial court was too liberal. The test in making investments for a trust was the care and skill of a prudent man in conserving the property, not a man of ordinary prudence. The court noted that if it was found that the trustee was guilty of a breach of trust in investing according to this stricter standard, then plaintiff was entitled to recover for the losses suffered thereby. The damages for this breach of the trust duty were to be the losses from securities that the trustee was not authorized to invest in to the extent that said losses were due to the lack of prudence and not due to general economic conditions without such lack of prudence in conserving the trust estate. Depreciation of certain securities was not due to the breach of trust in taking the securities in the name of the trustee individually, but was caused by general economic conditions.