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MERETO ESTATE (04/13/53)

April 13, 1953

MERETO ESTATE


Appeals, Nos. 41 and 42, Jan. T., 1953, from decree of Orphans' Court of Montgomery County, May T., 1951, No. 34, in Estate of Rose E. Mereto, Deceased. Decree affirmed.

COUNSEL

John F. Finney and Joseph Knox Fornance, for appellants.

H. Ober Hess, with him Norman H. Brown, Leonard Turner, and Ballard, Spahr, Andrews & Ingersoll, for appellees.

Before Stern, C.j., Stearne, Jones, Bell, Chidsey and Arnold, JJ.

Author: Bell

[ 373 Pa. Page 467]

OPINION BY MR. JUSTICE BELL

This appeal arises out of the refusal of the Orphans' Court to surcharge trustees for a loss of approximately 75% or $26,000. from the sale of 1700 shares of United Gas Improvement common stock.

Rose E. Mereto died on November 25, 1929, leaving a will dated June 18, 1928, in which she appointed the Girard Trust Company and Frank J. Brennan executors of and trustees under her will. Testatrix gave 3/4ths of the income from the balance of her residuary estate to her nephew, Frank J. Brennan, for life, and 1/4th to her grand-nephew, Frank B. Brennan, for life, and the entire net income therefrom to the survivor for his life, and upon his death the principal, absolutely, to the survivor's lawful issue. Frank J. Brennan died on November 20, 1950, without issue, leaving to survive him testatrix's grand-nephew, Frank B. Frank B. has one child, Patricia Brodhead Brennan, a minor and sole remainderman.

Testatrix owned at her death 5250 shares of United Gas Improvement Company common stock. The executors sold 3550 shares of this stock at a substantial profit. The remaining 1700 shares were awarded to

[ 373 Pa. Page 468]

    them as trustees as a re-appraised value, as of April 21, 1932, of $20.50 per share, or $34,850. The trustees sold this block of U.G.I. as follows: on 8/5/37, 200 shares at 14, or a total of $2760.94; on 4/8/42, 100 shares at 4 1/4, or a total of $396.49; on 4/14/42, 1400 shares at 4, or a total of $5364.86. These sales resulted in a total loss of $26,327.71 -- approximately 75% -- for which the trustees claimed credit in their account. This was a colossal loss and it is only natural that the guardian of the minor remainderman should seek a surcharge.

Testatrix authorized her executors and trustees "to retain any and all investments that may come to them as part of my estate for so long a time as to them may seem advisable,...."

The test or standard of duty for a trustee who is authorized to retain investments has been long and clearly established, although its application in certain cases may present difficulties. In Stirling's Estate, 342 Pa. 497, 21 A.2d 72, this Court said (p. 504): "The authority to retain the investments did not justify holding without attention.... [The auditing Judge found and the appellants admit that there was no lack of attention, careful consideration and periodic review.] '... all that is required of a trustee "is common skill, common prudence and common caution, and he is not liable when he acts in good faith as others [prudent men] do with their own property... a trustee will not be held personally liable for an honest exercise of a discretionary power, in the absence ...


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