Court Opinion

ID: 3583530
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:34:07.71153+00
Date Added: 2024-06-11T07:41:37.628686
License: Public Domain

The principle of undivided loyalty — that a corporate trustee may not retain or deal in its own securities or otherwise occupy a position in which it has interests to serve other than the interest of the trust estate *Page 74 
(City Bank Farmers Trust Co. v. Cannon, 291 N.Y. 125, 131) — is firmly entrenched in our law. It prescribes an essential, an admirably essential, standard of conduct, but there is no doubt that a settlor may relax the rule and permit the trustee to deal with the trust property in such manner as otherwise might not be sanctioned. He may, for instance, expressly authorize his trustee to retain, or deal in, its own securities. Verbiage so explicit, however, is not demanded; the same result may be accomplished by other language, and here, I believe, the testator indicated his intent that his trustees be vested with such power.
The words chosen by the testator, as Judge THACHER acknowledges, confer truly broad powers of discretion upon the trustees, particularly the power to exercise "all the authority,and powers in connection with the same, I would possess, ifliving". Neither the Cannon case (supra), nor any other case can effectively alter their breadth. Here, in addition, we have more than words to point the testator's intent. It also appears that the testator had participated in the affairs of The Syracuse Trust Company as a member of its board of directors; that he had owned and retained a block of its stock; that he had appointed two trustees in addition to The Syracuse Trust Company, one of them his own attorney of long standing, the other the Trust Company's president who was also his brother-in-law. Under such circumstances, the testator's choice of language certainly evinces an unmistakable intent that the Trust Company was not to be bound by the rule of undivided loyalty insofar as retention of, and dealing in, its stock were concerned. (See, e.g., Scott, Trustee's Retention of Its Own Shares, 57 Harv. L. Rev. 601, 608,et seq., 616-617.)
The orders should be affirmed, with costs.
LOUGHRAN, Ch. J., CONWAY, DESMOND and DYE, JJ., concur with THACHER, J.; FULD, J., dissents in opinion; LEWIS, J., taking no part.
Orders reversed, etc. *Page 75