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KELSEY ESTATE. (06/30/58)

June 30, 1958

KELSEY ESTATE.


Appeal, No. 170, Jan. T., 1958, from decree of Orphans' Court of Philadelphia County, No. 3256 of 1933, in re estate of A. Warren Kelsey, Settlor. Decree reversed.

COUNSEL

Irving N. Kieff, guardian ad litem and trustee ad litem, appellant, in propria persona.

Walter Y. Anthony, with him W. LeRoy McKinley, for appellee.

Before Bell, Musmanno, Arnold, Jones and Cohen, JJ.

Author: Bell

[ 393 Pa. Page 514]

OPINION BY MR. JUSTICE BELL

The question involved is narrow: Can the inter vivos trustee invest in common stocks?

A. Warren Kelsey made a Deed of Trust on July 16, 1914 in which he assigned certain enumerated bonds, having an approximate value of $300,000, and $100,000 in cash to the Germantown Trust Company, Trustee, in trust for certain persons and purposes therein set forth.

Trustee filed a partial account, denominated Sixth Account, on November 30, 1955. The account showed an investment on October 25, 1955 in 20 shares of the common stock of Philadelphia Electric Company and the sale of those shares later on the same day, with a resultant loss of $34.58. The guardian ad litem and trustee ad litem demanded that the trustee be surcharged for this loss because the investment was unauthorized by the Deed of Trust.The Orphans' Court held by a majority of 3 to 2 that the restriction in the Deed of Trust was not an "express restriction" against investments which were authorized by statute. From the final decree the guardian and trustee ad litem took this appeal.

In Gillingham Estate, 353 Pa. 493, 46 A.2d 269, the Court said (page 495): "From the early history of the Commonwealth this Court has consistently held that in the absence of authority granted by the instrument creating the trust, or by the legislature, fiduciaries are

[ 393 Pa. Page 515]

    not permitted to invest the trust funds in stocks or bonds of private corporations: [citing cases]."

The Legislature authorized trustees and other fiduciaries to invest in preferred stocks in and by the Act of May 29, 1949, P.L. 1828, § 9, 20 PS § 821.9, and to invest in common stocks in and by the Act of August 24, 1951, P.L. 1410, and the Act of June 19, 1953, P.L. 284, 20 P S § 821.9, each of which amended the "Fiduciaries Investment Act of 1949", supra. Section 9 of the amendments of 1951 and 1953 authorized a trustee (or other fiduciary) - unless restricted by the testator or settlor (Section 18 infra) - to invest in common stocks which met certain specified qualifications or standards. The stock ...


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