Court Opinion

ID: 6984759
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:51:09.496147+00
Date Added: 2024-06-11T16:09:23.209482
License: Public Domain

JUSTICE SIMON, concurring in part and dissenting in part: Although I concur in the holding that the bank breached its fiduciary duty, I dissent from the additional holding that this ruling is to be applied prospectively only. Our majority opinion is based upon the duty of loyalty owed by a fiduciary. In this case, the bank’s duty as guardian was to protect the interest of its ward by investing the ward’s funds in instruments paying the highest yield consistent with reasonably prudent principles of investment. The ward’s interest conflicted with the bank’s own commercial interest in increasing the amounts of money deposited in the bank at the lowest possible rates of interest. This potential conflict ripened into an actual breach of duty when the bank bypassed attractive investments outside the bank and deposited the ward’s funds in low paying accounts in the bank. I do not know how common the conduct we condemn here is among banks in Illinois. However, the majority’s decision to apply its holding prospectively gives Illinois banks who have engaged in such conduct the opportunity to transfer guardianship funds into investments outside the guardian banks, and to avoid liability and penalties for their past conduct. By so limiting our holding, in effect we are granting amnesty to banks for culpable conduct which enabled the banks to profit. Those sums rightfully belonged to the wards whose funds were entrusted to financial institutions for proper management. Wardship is a condition designed to protect society’s most helpless and vulnerable members — minor children and mentally incompetent adults. It is a strange perversion of this protection where, as here, after properly recognizing that the law affords such protection, we act to minimize the loss to large financial institutions at the expense of the weak whose property it was the duty of banks to safeguard. The granting of amnesty is not a proper function of the judiciary. It is within our power to limit any of our opinions to prospective application. However, such limitation is the exception rather than the rule, and is usually reserved for decisions which overrule legal precedent, in order to avert injustice or hardship caused by the parties’ justifiable reliance on prior law. Alvis v. Ribar (1981), 85 Ill. 2d 1; cf. Skinner v. Reed-Prentice Division Package Machinery Co. (1977), 70 Ill. 2d 1; Molitor v. Kaneland Community Unit District No. 301 (1959), 18 Ill 2d 11 (overruling cases limited to prospective application because of hardship which would be caused to parties who relied on prior law). In contrast to Skinner, Alvis, and Molitor, this case overrules nothing. Rather, it reaffirms the law governing fiduciary relationships which has been frequently announced by this court (106 Ill. 2d at 119). The only rule on which banks could justifiably have relied is that they could not deal with property of their wards for their own benefit, and if they did, they would be liable in damages. Instead, the bank in this case violated the rule. Prospective application means that other banks that also violated the rule will not be held accountable for their breaches of duty. Because I cannot agree that under Illinois law this court should grant a pardon for their transgressions to any banks that have engaged in this type of conduct, I am compelled to dissent from that portion of the holding limiting our decision to prospective application only.